European credit – Tyntes Castle http://tyntescastle.com/ Tue, 31 Aug 2021 20:14:41 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://tyntescastle.com/wp-content/uploads/2021/06/cropped-icon-32x32.png European credit – Tyntes Castle http://tyntescastle.com/ 32 32 Revolut plans to launch a credit card in 2021 with the aim of breaking into the US market https://tyntescastle.com/revolut-plans-to-launch-a-credit-card-in-2021-with-the-aim-of-breaking-into-the-us-market/ https://tyntescastle.com/revolut-plans-to-launch-a-credit-card-in-2021-with-the-aim-of-breaking-into-the-us-market/#respond Tue, 31 Aug 2021 20:14:41 +0000 https://tyntescastle.com/revolut-plans-to-launch-a-credit-card-in-2021-with-the-aim-of-breaking-into-the-us-market/

Revolut intends to launch a credit card for its US users as early as the end of this year, as part of its strategy to make a strong impression in the overseas market.

This will be the first time that the digital bank will launch a credit card outside certain European countries, where it will be able to carry its Lithuanian banking license.

“[In] in the US we like our credit even more than in other countries, ”said Revolut US Managing Director Ron Oliveira. Financial news, speaking on the Barron Live Podcast. “This fall we will have an unsecured line of credit as a consumer retail product, as well as credit cards, but that won’t happen until the end of the year,” [or] first [quarter] next year.

Revolut first opened in New York in March 2020, although its major debut plans in the United States were quickly hampered by the global pandemic and multiple lockdowns.

The fintech company is targeting a reach of one million users in the United States by the end of 2021, as part of a major marketing blitz in the region. This would be one of the first successful debuts for a European digital bank in the market, with launches by Monzo and N26 yet to take off amid fierce competition from their local competitors.

READ Revolut to launch major US blitz as it targets 1 million users this year

The return to the office of financial companies around the world has been marked by the resumption of the pandemic, with cases skyrocketing as the Delta variant of Covid-19 spreads. Wall Street institutions, including Goldman Sachs and Citigroup, have pushed U.S. staff to get the shot, while some, like Vanguard, have offered financial incentives to get the shot.

In a broad interview, Oliveira said Revolut chose not to make the Covid-19 vaccination a return-to-work requirement at its New York, San Francisco and Dallas offices.

“We didn’t require you to be vaccinated to enter the office. What we followed is the CDC [Centers for Disease Control and Prevention] and its recommendations, ”said Oliveira, citing the requirements for wearing a mask and practicing social distancing. “We did not come across an official policy that goes beyond what the experts tell us. “

Revolut filed for a banking license application in California earlier this year, as part of plans to be able to operate independently from its U.S. sponsor bank, the Metropolitan Commercial Bank.

Oliveira said the bank welcomes the increased oversight as US regulators step up their spotlight on the fintech sector. Local fintech giants such as Robinhood have come under the microscope in recent months as service adoption has taken off amid growing demand for products like stock trading and cryptocurrencies, all of which are two offered by Revolut.

READ Robinhood shares fall on SEC warning of possible payment restrictions for order flow

“At first, regulators saw fintechs as too small to really worry too much about. Now they’re too big to ignore, ”Oliveira said.

“Regulators want to dig deep into fintech and see what regulatory additions they might need because… maybe in the future some of them might even be systemic risks that they want to make sure they are. are well watched. “

Revolut plans to launch its stock trading function in the United States in the coming months, Oliveira added, having accumulated around one million users of the product in Europe so far.

Revolut raised $ 800 million in new capital in July from new investors SoftBank and Tiger Global, making it the UK’s most valuable tech startup at $ 33 billion. Oliveira said the funding would be used to fund its growth plans in the United States and to pursue banking licenses in the United Kingdom, Singapore and Australia.

The full interview with Ron Oliveira is available to listen to via Apple podcasts, Spotify and Google Podcasts.

To contact the author of this story with comments or news, email Emily Nicolle

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ADRs End Higher, Immutep and BioNTech Among Companies That Are Actively Trading https://tyntescastle.com/adrs-end-higher-immutep-and-biontech-among-companies-that-are-actively-trading/ https://tyntescastle.com/adrs-end-higher-immutep-and-biontech-among-companies-that-are-actively-trading/#respond Fri, 27 Aug 2021 22:49:00 +0000 https://tyntescastle.com/adrs-end-higher-immutep-and-biontech-among-companies-that-are-actively-trading/

By Kimberly Chin

International stocks traded in New York City closed higher on Friday.

The S & P / BNY Mellon US Certificate of Deposit Index rose 0.8% to 166.21. The European index improved 1% to 146.83. The Asian index rose 0.2% to 221.97. The Latin American index rose 2.6% to 211.97. And the emerging markets index rose 0.3% to 374.93.

The ADRs of Immutep Ltd. rose 3.9% after the company said it obtained a Chinese patent for LAG525, nucleic acid molecules that encode the LAG525 antibody and which can be used for the treatment of cancer or infectious diseases.

BioNTech SE’s ADRs fell 3.1% after Chinese health officials delayed approval of the BioNTech-Pfizer Inc. Covid-19 vaccine over fears it could undermine confidence in Chinese vaccines.

Over-the-counter Lukoil PJSC’s ADRs rose 2.7% after the Russian oil and gas company reported improved second-quarter profits on Friday, reflecting higher prices for crude oil and refined products, and higher volumes for petroleum production, petroleum trading, refinery throughput and retail sales.

Barclays PLC’s ADRs rose 2.2% after the UK lender said on Friday it had agreed to acquire a $ 3.8 billion credit card portfolio in the United States. Barclays Bank Delaware has entered into an agreement with Synchrony Bank of Synchrony Financial to purchase credit card accounts and debt issued in partnership with Gap inc.

Write to Kimberly Chin at kimberly.chin@wsj.com

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]]> https://tyntescastle.com/adrs-end-higher-immutep-and-biontech-among-companies-that-are-actively-trading/feed/ 0 German Spend Management Platform Moss Closes € 29 Million Series A Extension Round https://tyntescastle.com/german-spend-management-platform-moss-closes-e-29-million-series-a-extension-round/ https://tyntescastle.com/german-spend-management-platform-moss-closes-e-29-million-series-a-extension-round/#respond Tue, 24 Aug 2021 08:18:10 +0000 https://tyntescastle.com/german-spend-management-platform-moss-closes-e-29-million-series-a-extension-round/ Moss, the technology-driven financial management platform for holistic expense management, has successfully closed a $ 29 million Series A expansion funding round.

Only 6 months after the last funding round, with huge growth and ambitious but promising targets for 2021/2022, the start-up again received funding from VC Valar Ventures from Peter Thiel, with the participation of Cherry Ventures and Global Founders Capital of Berlin. Moss can now report total capital of over $ 64 million, with a company valuation of $ 264 million, less than a year after its product’s initial launch. Existing investors thus reaffirm their confidence in the business model and support the Berlin start-up in its further development plans for the product.

“We want to help companies transform their organizations’ financial processes to make the most of their potential. This vision drives us every day and motivates us to take Moss to the next level. Our growth trajectory since the inception of Moss has been been outstanding – from both a team and a product perspective. Since the last funding round six months ago, not only has our customer base quadrupled, but we have also been able to introduce product innovations. remarkable such as transparent accounting export using the DATEV API and digital processes for approval and management of invoices. And our credit product offers a unique advantage in the European card and expense management area ”, explains CEO and co-founder Ante Spittler.
Moss presses the growth pedal

FinTech was initially launched in mid-2020 as the first true corporate credit card for start-ups and digital businesses in Germany. With Moss, customers now have access not only to high credit limits in conjunction with employee virtual and physical credit cards, but also versatile expense management software. Since its inception, more than 8,500 credit cards (physical and virtual) have been issued and more than 100,000 transactions have been processed. The user-friendliness of the product and its innovative approach to meet the specific needs of the company convinced the market. Customers point to the significant efficiencies Moss brings to their organizations, as well as the company’s rapid speed of innovation. It is therefore not surprising that the start-up’s customer satisfaction is exceptional. Following the great success in the German start-up space, Moss also entered the SME market, where the product is already very popular.

Andrew McCormack, Founding Partner of Valar Ventures, said of the investment: “We are delighted to continue to support the passionate founding team of Moss in achieving their goals. With their extensive technical and financial expertise and business experience, they are uniquely placed to bring a new understanding of expense management to businesses. Moss has been on a strong growth trajectory in recent months. With a 15% market share among German start-ups, they are already among the market leaders in their segment. We are therefore delighted about future developments. “
Focus: internationalization, product innovation and team growth

With this investment, the start-up now wants to exploit the European market with its credit card product and its financial management platform for overall expense management. Moss will be available in a second market before the end of this year, with more countries to follow in 2022. In addition to internationalization, the team around founders Ante Spittler, Anton Rummel, Ferdinand Meyer and Stephan Haslebacher plan to ‘other product innovations such as an overview of the company’s liquidity, as well as more comprehensive financing solutions. In doing so, Moss wants to take an important step towards a holistic platform for managing all of the company’s finances. With important partnerships such as DATEV and Raisin Bank already in place, more are planned in the coming months. In addition, Moss plans to more than double the size of its current team of over 100 in the coming year to meet its ambitious goals and provide even better service to its customers.

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Parties abound during Solheim Cup week https://tyntescastle.com/parties-abound-during-solheim-cup-week/ https://tyntescastle.com/parties-abound-during-solheim-cup-week/#respond Sun, 22 Aug 2021 18:32:00 +0000 https://tyntescastle.com/parties-abound-during-solheim-cup-week/

August 22 — Put on your red, white and blue and come support our American team at the Solheim Cup, the most prestigious international event for professional women’s golf teams, taking place right here in Toledo from August 31 to September 31 . 6 at the Inverness club.

This biennial international event features the best American players from the Ladies Professional Golf Association Tour and the best European players from the Ladies European Tour.

Named after Karsten Solheim, the founder of Karsten Manufacturing Corporation, which manufactures PING golf equipment, it was launched in 1990 with Karsten as the title sponsor. Today, the global partners are PING, Rolex and Marathon Petroleum. There will be great golf to watch.

But there is more to Solheim than golf; it’s a great one-week social event. Even if you are not a golfer, this is still the place to network and to see and be seen. Inside, outside and all around The Links in Inverness there will be plenty of social places, plus when you walk the Links you never know who you may meet – friends volunteering on a hole, in a food stall or a merchandise tent, in the midst of guests from all over the country and from other countries as well.

The Meijer Pavilion, which offers fans a 300-degree view of the golf course via outdoor seating and an air-conditioned area with enhanced food and drink options available for purchase, is a great way to socialize. Weekly passes cost $ 385, which includes access to the tournament grounds.

The corporate space of the Pavillon des Patriotes by invitation will be full of enthusiasts. Several other Solheim private parties are planned throughout the week in Inverness and other locations, including the 2021 Solheim Cup Women’s Summit, Change the Game Fore Women presented by Owens Corning. For more information, call 419-531-3377.

The Ohio Club, an air-conditioned tent right next to the 18th hole, features full food and beverage service, TVs, executive toilets, and an outdoor patio Friday through Monday. A two-pack costs $ 5,000 and a four-pack costs $ 10,000.

If you have volunteered, there is also a party for you.

The point is that the week will be in full swing with fun. So even if you aren’t attending a private party, you can come to the tournament and downtown events. And if you dine in one of our excellent restaurants in Toledo, you can also meet Solheim guests from all over the country and Europe. If you do, make sure they feel welcome.

Here are some public events to tickle your t-shirts:

—SOLHEIM After Sundown Downtown presented by Danberry Co., Realtors, is the Solheim Cup week’s kick-off event. It’s at Hensville Park next to Fleetwoods on August 31, 6-9pm with the local Zach Attack! The Ultimate Throwback Party group. Customers can walk around, sip and dine, and sit at tables here and there and shop at the live and silent auctions.

And no need to bring cash: it’s a cashless event, so just bring your credit card.

All proceeds will go to Danberry’s Treasure Chest for charity.

The $ 75 ticket includes access to the event, a drink ticket and a practice ticket for Wednesday, September 1.

—The Fan Fest presented by ProMedica, a two-day event, is expected to attract over 40,000 visitors. The events will be broadcast live on video walls. These are cashless events, so bring your credit card.

On September 3, 2 p.m. to 11:30 p.m. at Promenade Park, Gwen Stefani is the featured entertainment along with local talent on various stages including the Toledo School of the Arts, an Arts Alley, Imagination Station Entertainment and the LPGA Girls Golf Foundation Expo.

A variety of bars, including the Fountain Bar, built directly above the fountain in Levis Square Park, will be everywhere, as will the tasty cuisine of Toledo’s 20 local restaurants.

—The Solheim opening ceremony also takes place on the same day, September 3, at Promenade Park from 5 p.m. to 6 p.m.

The grand finale of the evening is the fireworks display.

General admission tickets are $ 30 and Preferred View tickets are $ 85.

—Saturday, September 4, return downtown to Promenade Park for Fan Fest with Chris Young from 5:30 to 11:30 p.m. There will be more fun with food trucks and a variety of bars, including a lounge champagne and wine.

—Sunday offers to chat at the tournament. Save yourself the hassle of parking on Sunday or any day. The Stranahan theater has a relay park. Weekly parking passes are available online for $ 50. On-site parking is $ 10 per day – cash only. No daily parking pass will be sold online.

– Monday is the last day and the closing ceremony takes place in Inverness. This is the last chance to mingle with Solheim 2021!

Before heading to Solheim and related events, be sure to lighten your load. It will be easier when you go through security. Fan Fest has a clear bag policy, but clear plastic bags are encouraged for the entire week. So leave those big handbags at home. The only exceptions for extras are if you have medical items.

For more information and tickets, visit https://www.solheimcupusa.com/event-tickets, www.SolheimCupUSA.com, or solheimcup@lpga.com.

Contact Barbara Hendel

at bhendel@theblade.com.

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First images and videos of the flight over the double Venus https://tyntescastle.com/first-images-and-videos-of-the-flight-over-the-double-venus/ https://tyntescastle.com/first-images-and-videos-of-the-flight-over-the-double-venus/#respond Sun, 22 Aug 2021 08:58:29 +0000 https://tyntescastle.com/first-images-and-videos-of-the-flight-over-the-double-venus/

The ESA / JAXA BepiColombo mission made its second overflight of Venus on August 19, 2021, approaching within 552 km of the planet at 13:51:54 UTC for a gravitational assist maneuver. The three surveillance cameras (MCAMs) on board the Mercury transfer module were activated during dedicated imaging slots, shortly before the closest approach until the following days. Examples are shown in this infographic. Credit: ESA / BepiColombo / MTM, CC BY-SA 3.0 IGO

Two spacecraft carried out historical overflights of Venus this month, and both returned sci-fi-style views of the mysterious planet surrounded by clouds.

The Solar Orbiter and BepiColombo spacecraft both used Venus for gravitational assistance within 33 hours of each other, capturing unique images and data during their encounters.

Solar Orbiter, a joint mission between ESA and Nasa to study the Sun, passed Venus on August 9 at a distance of 7,995 km (4,967 miles). Then BepiColombo, a collaboration between ESA and JAXA to Mercury, passed just 552 km (343 miles) from the surface of the planet on August 10.

The lower right image in the collage above was taken when BepiColumbo was 1,573 km from Venus.

Here is a video of the Solar Orbiter view, from the SoloHI imager:

https://www.youtube.com/watch?v=VUEbs7cYcCU

The camera observed the night side of Venus in the days leading up to the closest approach. SoloHI will be used to take images of the solar wind – the stream of charged particles constantly released from the Sun – by capturing the light scattered by electrons in the wind. In the days leading up to the Venus flyby, the telescope picked up the brilliant glare from the daytime side of the planet. The images show Venus moving across the field of view from the left, while the Sun is off camera in the upper right. The night side of the planet, the hidden part of the Sun, appears as a dark semicircle surrounded by a brilliant crescent of light, ESA scientists explained.

Fly by Venus

Sequence of 89 images taken by surveillance cameras aboard the Euro-Japanese BepiColombo mission to Mercury as the spacecraft approached Venus on August 10, 2021. This was the second of two gravity-assisted overflights of Venus necessary to set course for Mercury. . Credit: ESA / BepiColombo / MTM, CC BY-SA 3.0 IGO

The two overflights helped the two spaceships reach their next destinations. BepiColombo is expected to reach the innermost planet of the solar system in October 2025. The spacecraft needs overflights of Earth, Venus, and then several overflights of Mercury itself, as well as the spacecraft’s solar electric propulsion system. , to help steer towards Mercury’s orbit against the Sun’s immense gravitational pull.

BepiColombo is actually made up of two attached orbiters: the Mercury Planetary Orbiter and the Mercury Magnetospheric Orbiter. The Planetary Orbiter will map the planet in detail, and the Magnetospheric Orbiter will, of course, study its magnetosphere.

This BepiColombo Venus flyby video includes sonication of data recorded by the Italian Spring Accelerometer (ISA) aboard the Mercury Planetary Orbiter spacecraft. The data from the accelerometer has been converted into frequency to be made audible to the human ear. The resulting sound is quite interesting, the sound reflecting the variations in the spacecraft’s accelerations due to the gravity of the planet acting on the structure of the spacecraft, as well as the effects due to the rapid changes in temperature, and the change. reaction wheel speed as they work hard to compensate for these effects. The audio was adapted at the time the images seen in this film were captured, in the moments following the closest approach.

Solar Orbiter captures the glow of Venus

Images of Venus captured by the Solar Orbiter heliospheric imager aboard the ESA / NASA Solar Orbiter. Credit: ESA / NASA / NRL / SoloHI / Phillip Hess

Solar Orbiter will perform a final close flyby of Earth on November 27 this year, within 460 km (285 miles) before other Venus slingshots tilt its tilt, helping the spacecraft to get into the correct position. position to get the very first views of the Sun’s poles, a crucial part of the mission to help us understand the Sun’s 11-year activity cycle. The start of the primary mission also begins in November. It will take the images closest to the Sun as it approaches less than 42 million km and will measure the composition of the solar wind.

Originally published on Universe today.

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Vodafone Group Plc (VOD) Q1 2022 Earnings Call Transcript https://tyntescastle.com/vodafone-group-plc-vod-q1-2022-earnings-call-transcript/ https://tyntescastle.com/vodafone-group-plc-vod-q1-2022-earnings-call-transcript/#respond Mon, 16 Aug 2021 12:08:05 +0000 https://tyntescastle.com/?p=779

Image source: The Motley Fool.

Vodafone Group Plc (NASDAQ:VOD)
Q1 2022 Earnings Call
Jul 23, 2021, 5:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Nick ReadChief Executive

Good morning, everyone, and thank you for taking the time to join us, Margherita and myself, at our Q1 trading results announcement. You’ll find on our website, hopefully, a comprehensive set of materials to help you understand our results. But I thought I’d just take an opportunity just to touch very briefly, 30 seconds, on just the key highlights before we then go on to questions.

We are back to service revenue growth in Europe as well as Africa with over a 3% growth in the quarter, and we’re growing in both consumer and business. Around 1 percentage point of that growth was clearly a lapping effect of COVID-19 last year that obviously suppressed our results. But even excluding that, I would say that is a very healthy growth rate for us as a business, and we are firmly on track on our guidance.

Now clearly, we’re not back to normal yet on our trading activity, our commercial activity and sales volumes. Footfall in the big-four European countries in aggregate was around 40% below pre-COVID levels. So we’ve yet to see that retail pickup that we are looking for, and this was particularly evident and heavy in Germany.

We have seen, in more recent weeks, as retail stores have started to open up, volumes increasing. And therefore, we look forward to the back-to-school season that we’re going to see. Obviously, if activity was low, you can see from our churn numbers that in Europe, mobile contracts, if we exclude Spain, which had a specific legislation adjustment in COVID last year, you see that we were down 1.4 percentage points year-over-year. So we have good churn trends across the vast majority of our markets.

In business, we saw service revenues grow 2.7%. We saw good growth rate in our digital services. Clearly, the 2.7% was enhanced slightly because of, obviously, again, the COVID impact of last year. But we definitely expect and have been engaging with governments in terms of the EU recovery funds, which we should start to see coming through in the second half of this year. In Europe, more broadly, we grew service revenue in all markets, except Italy, and we had a particularly good rebound in the U.K. and our cluster Europe other markets.

Vodacom maintained strong momentum, and particularly in financial services, which were up 34% in Q1. And we are due to launch our Vodacom Super App or VodaPay Super App in the coming months in South Africa. Clearly, more to do, particularly in accelerating and improving shareholder value, and we remain still very focused on optimizing our portfolio moving forward to ensure that we keep shareholder very much in our forefront of things that we are focused on. And on that, Margherita and I will take your questions.

Questions and Answers:

Operator

Our first question today comes from Andrew Lee from Goldman Sachs. Andrew, please go ahead. Your line is now open.

Andrew LeeAnalyst

Morning, Nick; morning, Margherita. I have a question on the revenue growth outlook. In the first quarter, its great trends with easy comps but suppressed commercial momentum, and particularly in Germany. So the question is, is the first quarter ’22 growth rate a high watermark for growth during the year? And how should we think about commercial recovery through the year, especially in Germany?

Nick ReadChief Executive

Well, I’ll let Margherita answer in terms of service revenue sort of outlook or view. I’d just say in terms of trading, I mean, clearly, these remain challenging times. I’m not just talking our industry, challenging times for everyone. And it was always very clear that this would not be a linear recovery. So we should expect bumps in the road. We are expecting bumps in the road in terms of how we’re looking at things. Clearly, as I said, I’m pleased with the 3% growth and the underlying growth rate that we had, and we’re firmly on track on our guidance.

I’d say in terms of commercial activity, if I look, it’s clearly has been suppressed. If we pick Germany, as your example, what we saw in April, May was footfall down 80%. It did then start to improve to June, but still down 50%. So we are, by far, not there yet in terms of normalization. If you look at examples of Spain, Italy, on mobile net port, these are still down year-over-year. So I would say, overall, you’re just seeing a lower level of activity. And as I say, you see that in our churn.

So I think this is the case of, let’s see as we move into the back-to-the-school period. I think that becomes very important. We’ve certainly focused on the propositions, the promotions, the above-the-line campaigns, that we will be hitting on back-to-school, and we think that that will reignite our commercial momentum.

Margherita Della ValleChief Financial Officer

On service revenue growth, of course, Q1 was a very, very special quarter. We have seen roaming moving from being a headwind to a tailwind now. And on top of that, we have had this, what I call, one-off effect from last year at this time, seeing the effectively shock of the pandemic in our markets.

If you remember the presentation we did a year ago in Q1, we were calling out a number of effects, particularly things like business projects being delayed from Q1 into Q2 or prepaid top-ups being more difficult in some markets. And I would say probably the market which was most affected by the beginning of the pandemic was Spain, where the emergency decree was particularly severe.

Taken in aggregate, these one-offs are worth about 1 percentage point, which, as we say, is not going to recur as we move into the next few quarters. But we are well on-track to deliver growth this year, both in Europe and Africa. And we are pleased with the momentum, as Nick was mentioning, on service revenue. One data point I would call out from that perspective is that now we have all the data from the last 12 months. And what we have seen is that if you take the 12 months to March ’21 through the pandemic, we have outperformed in retail service revenue growth, all the incumbents and all the scaled players in our major European markets, both in fixed and in mobile service revenue growth. So we are pleased with where we are.

Now you asked about the coming quarters, of course. And I would say, different growth drivers are affecting the profile for the remainder of the year. If I take in turn consumer and business, I’d say in consumer, near term, we are going to get the headwinds coming from the lighter sales driven by the pandemic in the last 12 months. As Nick said, we are now focused on reaccelerating after the summer with the back-to-school period. And then it’s very much people cue, so volumes, but also price. And on price, we need to see how the balance between the more-for-more inflationary pricing actions that we are taking works against the competitive pressures.

In business, we are set for acceleration throughout the year. You have seen the good results already in Q1. We are also gaining market share clearly in business. And I think there, the speed of the acceleration will very much depend on the European recovery fund and how it will support our demand for, in particular, digital services. And so timing of that will be critical, and in particular, how much of that will fall into the second half of this year and how much will be phased over the coming years. But if I step back, I’d say, definitely, as Nick mentioned already, on track to deliver our guidance this year.

Andrew LeeAnalyst

Thank you. That was really helpful. Thank you.

Operator

Thank you very much, Andrew. Our next question today comes from Nick Delfas from Redburn. Nick, please go ahead. Your line is now open.

Nick DelfasRedburn — Analyst

Thanks so much, indeed. So just a question on African fintech, really. Obviously, you’ve got a fantastic business there, particularly in Safaricom, but also in Vodacom. And it could be worth well over 10p per Vodafone share. How do you think about how you illustrate that value to, I guess, the London market as opposed to within Nairobi, where it is relatively well reflected perhaps within Safaricom? Thanks very much.

Nick ReadChief Executive

Yes, Nick, I think this is a really important topic. You know that I have spoken about M-PESA now for 10 years. I mean I’m very passionate about the transformational nature of it. We’ve committed resource investment. We have never constrained the M-PESA platform and really try to evolve it. I am super excited. I really think that the pandemic — I mean, we have — it’s one of those platforms you have to do an awful lot of investment over three, four years to gain scale and then become the default player within each of the markets. And we’ve done that investment over the last 10 years. We are the number-one player in all of the markets that we are in. So whether it’s DRC with Hans there, Lao Tzu, Anwar Soussa [Phonetic], so having built that position.

And now to the question of how you can truly scale through more, if you like, user cases going forward. You saw that transaction volumes are materially up. I mean, you’ve seen that in Vodacom International, the service revenue for M-PESA was up 43%. I mean, these are staggering numbers for a platform that’s already number-one in the marketplace. And this is because we’re really breaking out of just peer to peer. This is now companies paying their payroll using M-PESA, people doing their utility bills using M-PESA. So we really do think it’s an ecosystem, a platform, that’s our mindset. We’re investing heavily behind it.

One of the things we needed to start thinking about is that transition journey between feature phones and smartphones. So we’re now doing mini apps that then will allow us to do things like savings, micro loans, funeral insurance, etc. And so this is a new product set that is coming to M-PESA. And clearly, in South Africa, the financial services component will be done through what we’re calling VodaPay, which is a super app, execution is slightly different. You add all of this together, it’s talking 15% of Vodacom’s service revenue.

So when I’ve spoken to Shamil and we’ve strategized about where we want to take that, we’ve said, look, we really need to start separating this business out into separate legal entities, make sure that we show complete transparency of this business and what it means to growth and margins. And then that also allows us other opportunities inorganically going forward.

And so I would say, at this moment, we’re driving hard. We’re investing heavily. We’re doing commercial partnerships with Alipay. We may do other commercial partnerships with other people. I think there’s an opportunity to take M-PESA outside of our footprint in Africa because it’s really getting traction. So many opportunities, organic, maybe inorganic in the future, separate out the platform and then think about how we drive for shareholder value

Nick DelfasRedburn — Analyst

How long will it take to separate out the platform legal entities?

Nick ReadChief Executive

We’re running through that process, we have been for the last, I want to say, nine months. We moved the platform down from the group down into Africa, because that was an important component as well, hosting locally. And then — so it’s a — there’s a number of parts of the execution.

Nick DelfasRedburn — Analyst

Okay. Fantastic. Thank you.

Nick ReadChief Executive

Thank you.

Operator

Thank you very much, Nick. Our next question today comes from Georgios Ierodiaconou. Georgios, please go ahead. Your line should now be open.

Georgios IerodiaconouCitigroup — Analyst

Thank you for taking my question. I have maybe a follow-up on some of the comments you made around back-to-school and commercial momentum. If we look at these results, perhaps the one area of weakness has been some of your KPIs, particularly in fixed. So I just wanted to ask maybe a general question about what are the issues you see in different markets, and particularly in some of the more competitive markets like Italy and Spain, whether there is a point in time where the KPIs take priority and you could perhaps take a bit more action in order to stabilize your KPIs and be more promotional.

And then maybe a slightly separate question for Germany. Do you expect when the footfall returns back to normal levels for the KPIs to fully recover? Or are there any other headwinds you may be facing? Thank you.

Nick ReadChief Executive

George, just maybe I’ll add a few comments and then Margherita can do some builds. Look, I think we, as a company, have always been focused on value rather than chasing volume. So we are a good rational player in the marketplace. We compete in a structural way, now increasingly on a dual brand strategy.

So for every market, from a pricing perspective, we go through an exercise where we identify the various brands that we’re competing against and decide how we’re going to position pricing versus those brands, and then we hold that position. So if they move up, move down, we adjust accordingly, to ensure that we have made it very clear what point of differentiation we have and where we need to match.

So I’d say we stay disciplined on that. Clearly, if shops are shut and footfall’s down, the worst thing you can do is throw lots above-the-line marketing money into a market that’s pretty quiet. And this is an example in Germany. So when we saw that the retail activity was low, footfall was low, what we said is for quarter one, we’re not going to go above the line. This would be wasted marketing resource. And what we’ll do is we’ll store that up for later in the year when we felt that all the stores would open.

So I look, as an example, in Germany. Generally, this has been our approach across all of the markets. If footfall — so U.K. retail has been open. We’ve been above the line. We’ve been commercially front-footed because it was appropriate to do that. Clearly, we manage our base, the lower churn, and you’re seeing that in the statistics.

If I look at Germany specifically, I would turn around and just say, look, we have clearly shaped a series of propositions and promotions for the back-to-school. So I mean we’re good to go as we are through the whole of Europe. We have worked out TV portfolio. I think it’s a strong portfolio. We’ve been disappointed. We’ve not been able to get the retail stores because that’s a really important part of the TV portfolio in stores. So we’re good to go on the TV portfolio. We’ve harmonized our propositions and pricing. We’ve integrated our sales channels. These are all things we’ve talked about over the last couple of quarters, it’s just we haven’t had the retail estate to really drive this. So our view is as soon as that retail estate is fully open, we are on the front foot again and we are confident that we have compelling propositions to drive.

Margherita Della ValleChief Financial Officer

Just maybe to add that, fixed is not exactly the same in all the markets. I think there are different dynamics across different markets. And there were just a couple of points I wanted to point out. One is related to consumer, and it’s the fact that if you take a market like Italy, growth has now moved very much into FWA as a source of expansion. And for us, FWA is reported within mobile. So just to keep that in mind when you look at the numbers because the market growth has really shifted there in consumer.

And the other aspect is business. A third of service revenue in fixed are from business, which is driven by very different factors. It’s as much as 40% in certain markets now in Southern Europe. And as you have seen from our reporting in business, we are growing well. And we expect further acceleration because all the areas of growth in fixed that distinguish us, we have very little legacy products, we are focusing on SD-WAN. And other new products will be even more propelled by the European recovery fund. So I think it’s just something to keep in mind when you project the fixed growth in the coming quarters.

Georgios IerodiaconouCitigroup — Analyst

Thank you.

Operator

Thank you very much, Georgios. Our next question today comes from Jerry Dellis from Jefferies. Jerry, please go ahead. Your line is now open.

Jerry DellisJefferies — Analyst

Yes. Good morning. Thank you for taking my question. I have a question really related to what you’re seeing as the retail store footfall recovers in the months of June and July. How are you seeing that better footfall translating into net adds recovery? I mean, obviously, what happens in the rest of the year is highly uncertain. But perhaps if you could comment on what you’re seeing in June and July, please, that would be helpful.

And if you could make particular reference to the German situation, please, where I think we saw about 30,000 cable net adds in the last quarter, and those were essentially only migrations from DSL. It would be very interesting for us to understand what recovery you may be seeing in June, July there. Thank you.

Nick ReadChief Executive

Well, Jerry, I don’t think it’s appropriate to get down into weekly projections, results, etc. I think on a slightly higher level, I would say, that as stores have opened, footfall is not bouncing back across retail, not our retail, but just the retail, full stop. And I think it’s because a lot of that has been the fact that the stores have opened back up just as we’re moving into the vacation period. And so, I’d say people are prioritizing other things at the moment, I don’t know.

But — so I would say this is very much — the test will be back-to-school period. I’m seeing it more toward the end of August and September as being a more normalized activity going forward. You’ve seen everyone talking about the double jab, the certificates. You’ve seen what’s happened in France, etc. So I just — I just think at the moment, we are nowhere near normalization if we look at the month of June, July yet.

Jerry DellisJefferies — Analyst

Thank you very much.

Operator

Thank you very much, Jerry. Our next question today comes from Jakob Bluestone from Credit Suisse. Jakob, please go ahead. Your line is now open.

Jakob BluestoneCredit Suisse — Analyst

Good morning. Thanks for takin the question. I’ve got another question on Germany as well. Just trying to understand the weakness in net adds and a little bit more detail for fixed. Your net adds were down 70% year-on-year. Footfall in the shops is down 70%. The retail stores aren’t your only distribution channels, you’ve got online, you’ve got phones and so on. So it just seems like that the net adds drop is bigger than the footfall. So presumably, there’s something else going on. I presume your online sales aren’t down 70% as well. So can you just sort of help us understand, is it literally just low footfall in the shops and low conversion? Or is there something more broad happening here in Germany that explains quite why the net adds are quite so weak? And maybe if you can also just contrast it a bit with the numbers we saw from DT last quarter. And DT is showing a much stronger fixed line performance, so if you can maybe just help us understand the differences in your trends versus what they’ve disclosed so far. Thank you.

Nick ReadChief Executive

Jakob, I would say just in simple terms, when you’re in lockdowns and restrictions, it’s always going to favor the incumbent because they have a base. And they are constantly marketing to the base. Of course, we can market to our base, but what we’re looking to do is take share in the marketplace. And that’s why retail is a very important part to take share within the market.

So what I would say is that effectively, churn levels are down, activity levels are down. If you were a customer at this point in time in semi-lockdown, are you really going to change your fixed broadband provider? It’s not going to be top of mind. So this is what I mean. We made a conscious decision. We’re not going to run above-the-line campaigns. Because in the end, stimulating — try and stimulate demand when people are saying, “You know what, I might think about it, but I’m going to do it when we’re out of lockdown restrictions.” So it’s a very natural thing, in my opinion, that people would say, in that particular product, I’m going to wait until I know we’re back to normalization and then I may consider a provider, in which case we will be very much on the front foot.

Margherita Della ValleChief Financial Officer

I’d say that for fixed in particular, you can subscribe online. But in most cases, you still need an engineer to come into your home to do the modification. And again, not something I think people would have wanted to do, particularly in April and May in Germany and probably not something you are very inclined to do at this particular point in time.

Nick ReadChief Executive

There’s a real — I think there’s a real — so you get the hard facts of COVID and then you get the sentiment around concerns. And I think the Delta variant coming into Europe has, if you like, suppressed a little bit because people are concerned. And I think it’s only when they see, yes, OK, it’s come through, maybe the cases go up, the hospitalization doesn’t really move, confidence returns. It’s a confidence thing. So I just think at the moment, people are saying, I’m going to stick with my current provider, as evidenced by our historically low churn in Germany. I mean it’s not like we’re underperforming on churn.

Jakob BluestoneCredit Suisse — Analyst

Got it. Thank you.

Operator

Thank you very much, Jakob. Our next question today comes from Ottavio Adorisio from Societe Generale. Ottavio, please go ahead. Your line is now open.

Ottavio AdorisioSociete Generale — Analyst

Hi. Good morning. Could you hear me?

Nick ReadChief Executive

Yes, absolutely.

Operator

Yes, loud and clear.

Ottavio AdorisioSociete Generale — Analyst

Perfect. Yes, just moving away from Germany and going to another country, in Italy. Reduction in churn has damaged Vodafone, because in the market where you’re winning market share, that has helped you in a market where you’re losing market share, particularly in mobile. So I was just wondering if you can give us a bit of color what you would expect over the next few quarters, considering that the economy reopen, Iliad is very likely to be — to remain aggressive. And in fixed, they’re going to launch and much very likely the offering you have, particularly going to use the same wholesaler.

So on the other side, you’ve got also competition from the incumbent, has recently signed their partnership for premium content with DAZN. So you got basically two different drivers coming against you. So how your retention policy is going to evolve in that market? And what you reckon will be your trends you’re going to experience over the next two or three quarters given what the circumstances are today?

And there is a quick one, unfortunately I’ve not been able to ask in the past, but I want to ask this one on India. India this week has filed with the Supreme Court saying that no public sector bank is willing to offer guarantee Vodafone Idea. And the asset — all the assets already secured to the — with banks. Since September, they tried to raise funds. Now it’s almost a year, no one has come with fresh funds because they want the controlling shareholders, i.e., Vodafone, to basically help out as well. So if you can tell us what’s the strategy as it is now. You’ve been very firm in the past, at least over the last 12 to 24 months, not to bring fresh funds but — and you try to look in the market. But so far, nothing. And of course, the situation has been deteriorating, to say the least. So how are you going to break the impasse from there? Could it be there would be some repercussion on the other investment in interest, considering that you guarantee the sales coming from Vodafone Idea? Thanks.

Nick ReadChief Executive

Very comprehensive. I’ll tell you what, Margherita, you take your home market and I’ll take India. So do you want to go first?

Margherita Della ValleChief Financial Officer

Sure. Italy, very competitive, as you mentioned. We have some ups and downs regularly, particularly in the prepaid market. But I would say the last few weeks, the last couple of months in Italy have certainly seen an increase in competitive intensity. More allowances in mobile. We even had one of the — of the three top mobile network operator going on TV with the headline of EUR5.99 for 100 gig, which clearly we don’t see as sustainable. And the competitive pressure on pricing has also hit fixed. By the way, fixed is another dimension of what we were discussing earlier in Italy. We have seen, after a spike at the beginning of the pandemic in the fixed market, we have seen demand drying up, moving toward FWA. And in that context, price competition has heightened. And to your point, I don’t see this as reversing imminently given that there is an upcoming launch of Iliad. So very competitive.

Amongst the various factors you mentioned the agreement with DAZN, I need to say, I wouldn’t put in this intense competition, football on TV as a key factor in the Italian market, much less B2B subscribers even less paying for football. It’s nowhere near a market like Spain. And of course, also, football is available fully over the top as well. So I don’t think this is going to be a critical factor.

But back to what we see in terms of growth in the coming quarter, competition will continue to be intense. But at our end, you have seen the results improving. We are benefiting now, of course, from lapping the roaming drag, which was particularly strong in Italy. But in the coming quarters, we will also see the benefit of our new wholesale deals coming into line in service revenue.

And then a little bit more in terms of medium term, the European recovery fund. We’re mentioning it many times today, but Italy is the market that we get the largest allocation, EUR190 billion, of which EUR70 billion is grant. And it’s fair to say that we are very well positioned ourselves in Italy to benefit from the increased demand on business services from the European recovery fund.

I was mentioning earlier, a third of our service revenue is business. We are consistently taking share of the market. And therefore, we have a really great asset to get advantage from this. We need to see how it will phase in terms of timing, but a general improving trend on the back of these factors.

Nick ReadChief Executive

Yes. And just turning to India. Really, India is a question for Vodafone Idea. So — but within the going concern statement, they highlighted very clearly, they are dependent as a going concern on refinancing of debts that are coming due in terms of monetization of assets, in terms of government support, so AGR or floor pricing, etc., and raising funds. So I mean it is, as you say, a highly stressed situation, a difficult situation that they are trying to navigate. I mean we, as a group, try to provide them as much practical support as we can. But I want to make it very clear, we are not putting any additional equity into India.

Operator

Thank you very much Ottavio. Our next question today comes from Emmet Kelly from Morgan Stanley. Emmet, please go ahead. Your line is now open.

Emmet KellyMorgan Stanley — Analyst

Yes. Good morning, Nick. Good morning, Margherita. Thank you for taking my question. I had a question just on your introductory comments, Nick. You mentioned that you, the management and the Board, are still looking at the portfolio and options relating to the portfolio to deliver shareholder value. Can you maybe just expand a little bit on your remarks and what options are open to you and broader base? Thank you.

Nick ReadChief Executive

Yes, look, I think we have demonstrated over the last 2.5 years, since I’ve been CEO and Margherita CFO, that we are constantly optimizing the portfolio to drive shareholder value, and we will continue to do that very actively. What do I mean by very actively? I mean if I give you some sort of examples of areas. So Vantage Towers. we are really pleased with the fact that Vantage Towers is now up and running. The share price has moved on or just over 20% since the IPO. So I think that was vindication of the fact we kept the initial sale quite moderate, retaining approximately 82% of the interest in that company.

I think we did — the timing was a good timing because now we’re poised to help drive 5G but also consolidate in, if you like, the early rounds of the sector in Europe. So I think that is a really good growth opportunity for us going forward and we would want to take that. We are clearly open to, as I’ve said before, co-control scenarios, where sort of like-minded industrial players wanting to do combinations in the future, so we would certainly explore and entertain those type of discussions.

So we’ve definitely want to do more things with Vantage Towers going forward. I’d say second space would be in Africa. Clearly, we have Egypt, and you saw that we did a new shareholder agreement with Telecom Egypt. That gave us the optionality, not obligation, but optionality, to move it within the group. We could potentially move it to Vodacom, that could always be a scenario. You know we did that with Safaricom, and I think that was very successful. Clearly, no obligation, but it’s an option for us to explore.

And then finally, I would just say, just in general, consolidation through Europe. I still think that there’s opportunity to consolidate. I think that in terms of how governments are now viewing consolidation, I think they’ve seen how critical we are as critical national infrastructure. They understand the returns issue of the sector now. I really think they understand that. I’m having a series of very good conversations.

I was talking to the Secretary State for the U.K., as an example, earlier in the week on this particular topic. And I think they want to make sure we are a healthy sector because they understand that we enable world sector of sectors. So we enable all other sectors. And therefore, they need to have competitive infrastructure for the country to be competitive globally.

So what I’d say is the conversation around what is the right amount of infrastructure in the country, whether infrastructure can consolidate versus retail and other permutations, we’re exploring a lot of different aspects, I would say, to see what can be realized.

So I’d say very, very active in this area and we see. Of course, it comes with complications because you’ve got EU Competition Commission. But even Commissioner Vestager was commenting, saying that she was holding a meeting in October to really sort of stand back and start the conversation around the competitive framework that exists today. Now it might not change at all, it might be slightly moderated or they might do something more substantive. But I think conversations around things like the definition of the market in which you participate become a more relevant conversation. We argue they more too tightly define it at the moment and it’s broader than it looks. And things like ensuring that they are reinforcing and enforcing our competition law when needed more rigorously than they do in certain situations to stop abuse. These type of things, I think, could be all positives in terms of direction.

Emmet KellyMorgan Stanley — Analyst

Thank you very much.

Operator

Thank you very much, Emmet. Our next question today comes from James Ratzer from New Street. James, please go ahead. Your line is now open.

James RatzerNew Street — Analyst

Yes, good morning. Thank you. Nick, Margherita. I just had a question really on your business outlook that you are seeing in the commentary you’ve given there. So firstly, I suppose at the full year results, you announced an increase in your capex spend focused on business initiatives, and you said some of that was going to be success-based. So would love to hear an update on what success ratios you are seeing at the moment in some of those IoT and campus network project.

And then secondly, you talked a bit about the European recovery fund, which I think we all agree has the potential to be very significant. Would love to hear kind of what you’re seeing now bottom up on the ground on your ability to actually then bid for some of these contracts. What are you hearing from the SMEs, who some of these funds are going toward to digitalize and your ability to then win some of the contracts from them indirectly? Thank you.

Nick ReadChief Executive

Yes, James, let me — I mean, first of all, so we announced saying we’re going to invest in digital services. It does take us a while to build these digital services. If you remember, we were talking about a lot more integration of other people services onto our platform, so that we can bring those services to life. So can I give you a tangible example, because it sort of somewhat answers both. Spain is a really good example of the EU recovery funds. So they — the Spanish government, I mean, I’ve been impressed at the speed that the government has moved out. I mean, since I met them in April, and I went through here’s what you could do to make a difference for our sector, I mean they have hit every single point that I discussed with them. So whether it was the good spectrum outcome that we have with lower pricing, etc., whether it’s lower taxes that we’re going to get sort of tens of millions benefit moving forward.

The third was around where could you really make a difference on accelerating digitalization and SMEs. So they have badged EUR3 billion for the digitalization of SMEs, but already have said that they will release EUR0.5 billion in November. They are setting up effectively a digital hub to claim your subsidy. And what they’re doing is they are targeting that first EUR0.5 billion on companies with employees 1 to 49, so let’s say, SOHO and SMO at the S part of SMEs. And they are going to give a 90% subsidy level on digital services. So what does it mean? And we formed a consortium, as have Telefonica, so really the two of us. I mean, this would be the same you’re going to see in all markets, ourselves and the incumbents, because of our business profile, tend to be the two operators that can form consortiums. So then we form a series of companies that come behind us in terms of offering digital services integrated with our offering, that we can bring to our customer base and they can use a 90% subsidy against those services. And importantly, the 90% is paid upfront. And then we put the customer on a two-year, three-year contract for those services.

So we’re really working very hard to — I mean, we’ve contributed a lot to the shaping of this, but also to the ensuring that this will be a seamless experience for our customers. So I would say this is the best case we have at the moment. And what we’re doing to other governments around Europe is saying, please replicate this. This is a really good model for us. And we’re hearing good traction across the board.

Now everyone might do it through tax vouchers, whatever. So some of the other countries might be more complicated. But this is a really good example of volume now. I don’t know if you’ve got some builds.

Margherita Della ValleChief Financial Officer

No, the only build would be the type of services that will be bought with the bundles. You will have, I don’t know, a security bundle, an e-commerce bundle, a business support systems bundles, so that it’s easy for companies of this size to know how to satisfy their needs. And within each bundle, you will have a combination of services readily available from the consortium.

Nick ReadChief Executive

And one final build, because you specifically mentioned it, was mobile private networks, of which again I think we’ve taken a real leadership position. We believe in mobile private networks. We’re investing behind it. We’re standardizing it. The key thing here is how do you make it a series of products as opposed to it’s always a bespoke expensive solution. We want to make sure that we can do this at scale. So we’re productizing effectively through pilots. And what you’re going to see, I think, is traction in dedicated mobile private networks. Then there’s the more sophisticated version. So that’s like a customer’s campus factory, etc., manufacturing plant, logistics, support versus a sort of hybrid one. So you’ve got a dedicated and you’ve got sort of hybrid. And the hybrid then mixes the ability to use our main macro network and the dedicated. And that’s a slightly more sophisticated. And that needs some more technology road map development.

[Speech Overlap] because, yes, these are really — I think we have a really exciting proposition road map ahead of us. So I think the hardest thing we have at the moment is prioritization. The demand is there. It’s shift in that — you can hear what we’re saying, shift in our proposition prioritization and sequencing for the EU recovery fund. Where the money moves, we want to make sure we’ve got the strongest proposition and partners lined up, and it’s a good seamless experience for vouchers or whatever and then develop more broader, strategic differentiated products over time.

James RatzerNew Street — Analyst

That’s great. Thank you. Appreciate all the color, there.

Operator

Thank you very much, James. Our next question today comes from Adam Fox-Rumley from HSBC. Adam, please go ahead. Your line is now open.

Adam Fox-RumleyHSBC — Analyst

Thank you very much. You mentioned that the above-the-line marketing is pretty limited at the moment. And I think the reasons you put forward there make a lot of sense. But I wondered how you think that’s affecting customers’ perception of and desire for 5G. There’s not so much talking about — I’m not so much talking about customers on the bleeding edge here, but more the larger pool of customers. Or do you think it’s kind of unlimited tariffs where bill worry and bill shock is being removed, that’s really driving upside at the moment? Thank you.

Nick ReadChief Executive

Adam, can I give a view on this? Because for a consumer customer, 5G makes no difference, no difference on performance, but any user case that they are using today and what we can see over the next five years. So 5G is not for consumers. I mean it’s nice to say I’ve got 5G, I’ve got an icon. But this is a business application. You heard my passion around mobile private networks, etc., that’s where the monetization is. And so what we’re focused on is building our 5G network for businesses; and secondly, in cities to lower our unitary cost where it goes to your point about unlimited, because it has a lower unitary cost, which case unlimited we can deliver at a lower unit cost. So we want to build the lowest unit cost factory in the industry in Europe so that we can compete at any level against any player and earn superior margins. So we’re building it for that.

So we are not doing some of these deployments that some of our other peers are doing, which is using DSS, which is just trying to run a coverage claim for 5G. And actually, what we’ve seen is a degradation in performance on the blend of 5G, 4G on that network with DSS. So I would say — so going back to your marketing point, I think what we want to be marketing is the merit of a high-quality network that is a blend of 4G, 5G. You just want to know it’s there. You want to know it’s reliable, that you’ve got the coverage, that you’ve got the performance you need, that you don’t get drop calls, etc., it’s a seamless experience. We want to deliver that for our customers. And that’s our priority.

So our priority for consumers is high-quality network. But businesses, we are targeting 5G because we think that that is a monetization and transformational for our customers’ experience. Of course, above-the-line, we can talk about network more broadly, high-quality network, we can talk about propositions depending on which quarter we’re in and whether we have exciting things to talk about.

Adam Fox-RumleyHSBC — Analyst

Thanks very much.

Operator

Thank you very much, Adam. So we have time for one more question today from Carl Murdock-Smith from Berenberg. Carl, please go ahead.

Nick ReadChief Executive

Carl, you’re on mute. But they are impressive headset there. I mean, it really — you do look like you’re flying in some sort of spaceship.

Operator

Carl, maybe just make sure that your headset itself isn’t muted. There might be a thing on the wire.

Carl Murdock-SmithBerenberg — Analyst

No, it’s not. Now you can hear me.

Operator

There we go.

Carl Murdock-SmithBerenberg — Analyst

There we go. No idea what happened there. No idea what happened there. But I’m not giving up on my Trust headset. I just wanted to ask about the decision to stay with Carphone Warehouse in the U.K., and kind of what the new agreement gives you. I suppose it’s particularly interesting, Nick, given your personal history with that given that when you were CEO of the U.K. business, you actually left Carphone. So I was just wondering if you could add some comments there. Thanks.

Nick ReadChief Executive

Okay. I mean, clearly, it’s a confidential commercial contract, but let me give you the essence to answer your question. I mean, I think there was a feeling that a lot of operators have left Carphone and we’re exiting the indirect channels. The answer is no, they’re not. They just left Carphone and went into a lot of other, I would argue, more aggressive and more expensive indirect channels.

And so if you stand back in the U.K. setting, indirect channels, I’ve always felt, even though I did exit Carphone, I’ve always felt, have a role to play to complement operators, because they are offering something to a different target audience. The issue I always had was we made no money on the first life of the customer. And secondly, there was a high churn profile. So those two together are not good economics for us. What I wanted was something where we worked together to develop a loyal base. And this is the agreement we now have with Carphone.

So the big difference is we make money day one. It is SIM-only, so they carry on selling their handsets, but this is SIM-only. So you pick your handset and then come to Vodafone on a SIM-only offer. Importantly, we are working together on the base to improve the loyalty, lower the churn, give more products and services.

So what I’d say is it’s a fundamentally different arrangement between the two of us. I think it proved to be successful for both of us, because it has the right construct at the start which is, these are our customers together and how do we take them on a journey of more products and services and embed loyalty over a period of time. And I think we could do that better together. And so that’s why we were pleased to move forward on that basis. And we would rather work with indirect channels that have that philosophy rather than a high-sell, high-churn, let’s say, not so ethical, what would I say, approach to commercials.

Carl Murdock-SmithBerenberg — Analyst

Okay. That’s great. Thanks very much. Or maybe I should say roger, given the headset. Thank you.

Nick ReadChief Executive

Exactly. Look, you were the last question, I think. So look, thank you all for taking the time to join us. I hope that you all take a bit of time out over the summer, because I think everyone needs a little bit of a break one way or the other. And look, we look forward to the back-to-school. Please, if you are not a Vodafone customer, I can’t think why you wouldn’t be, you need to become one. We’re going to have great propositions in the marketplace. And I look forward — we look forward to seeing you all in November. Take care.

Duration: 50 minutes

Call participants:

Nick ReadChief Executive

Andrew LeeAnalyst

Margherita Della ValleChief Financial Officer

Nick DelfasRedburn — Analyst

Georgios IerodiaconouCitigroup — Analyst

Jerry DellisJefferies — Analyst

Jakob BluestoneCredit Suisse — Analyst

Ottavio AdorisioSociete Generale — Analyst

Emmet KellyMorgan Stanley — Analyst

James RatzerNew Street — Analyst

Adam Fox-RumleyHSBC — Analyst

Carl Murdock-SmithBerenberg — Analyst

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The Goodyear Tire & Rubber Company (GT) Q2 2021 Earnings Call Transcript https://tyntescastle.com/the-goodyear-tire-rubber-company-gt-q2-2021-earnings-call-transcript/ https://tyntescastle.com/the-goodyear-tire-rubber-company-gt-q2-2021-earnings-call-transcript/#respond Mon, 16 Aug 2021 12:06:33 +0000 https://tyntescastle.com/?p=825

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The Goodyear Tire & Rubber Company (NASDAQ:GT)
Q2 2021 Earnings Call
Aug 6, 2021, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Keith and I’ll be your conference operator today. At this time, I would like to welcome everyone to Goodyear’s Second Quarter 2021 Earnings Call. [Operator Instructions]

I will now hand the program over to Nick Mitchell, Senior Director, Investor Relations. Please go ahead.

Nick MitchellSenior Director, Investor Relations

Thank you, Keith. And thank you everyone for joining us for Goodyear’s second quarter 2021 earnings call. I’m joined here today by Rich Kramer, Chairman and Chief Executive Officer; Darren Wells, Executive Vice President and Chief Financial Officer; and Christina Zamarro, Vice President, Finance and Treasurer.

The supporting slide presentation for today’s call can be found on our website at investor.goodyear.com and a replay of this call will be available later today. Replay instructions were included in our earnings release issued earlier this morning.

If I can now draw your attention to the Safe Harbor statement on Slide 2, I would like to remind participants on today’s call that our presentation includes some forward-looking statements about Goodyear’s future performance. Actual results could differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Goodyear’s filings with the SEC and in our earnings release. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Our financial results are presented on a GAAP basis and, in some cases, on a non-GAAP basis. The non-GAAP financial measures discussed on the call are reconciled to the U.S. GAAP equivalent as part of the appendix to the slide presentation.

And, with that, I’ll now turn the call over to Rich.

Richard J. KramerChairman, Chief Executive Officer and President

Great. Thank you, Nick and good morning everyone. I’d like to start today by welcoming all of the Cooper Tire associates joining us this morning. I’ve had the opportunity to meet many of you in recent weeks and I’ve been so impressed by your passion for Cooper and for our industry. From our initial interactions on through to our integration meetings and business reviews, it’s clear that your industry knowledge and experiences will bring tremendous value to the combined organization. Sharing ideas and best practices will make us a stronger competitor and allow us to find new ways to better serve our customers and consumers. Our journey is just beginning but I’m really excited about our future and about what we can achieve together.

Let me begin my prepared remarks today by providing some comments to supplement this morning’s press release. For the second quarter, we delivered $349 million of merger-adjusted segment operating income, which is over 1.5 times what we earned in the second quarter of 2019. These strong results reflect continued recovery in demand and we outperformed industry growth across many of our businesses. At the same time, we delivered the highest quarterly contribution of price/mix that we’ve seen in our business in nine years and we continue to have good momentum.

As I look at the global consumer replacement industry during the quarter, we continue to see a sustained path toward recovery. As you would expect, this general theme is largely carried by mature markets. We continue to experience pandemic-related weakness in several of our emerging market countries. More broadly, however, economic recovery remains robust, particularly in the U.S. and China. Given these markets play to our strengths, we saw global consumer replacement market share rise nearly 1 point.

In our OE business, the global shortage of semiconductors resulted in weaker and more volatile demand than we expected. The auto industry produced approximately 2 million fewer vehicles than initially expected at the beginning of the quarter. Despite the weaker-than-expected backdrop, we continue to recover share globally, including the benefit of our strong position on SUVs and light trucks. We’re also continuing to see the benefits of our strong cost management.

On balance, our business performance is strengthening and with this as the foundation, toward the end of the second quarter, we completed our announced combination with Cooper Tire. I believe this is truly a transformational milestone for both companies. Our collective team continues to share excitement about our prospects going forward. As we do the work to bring our companies together, I know we will be better-positioned than ever before to meet our customers’ evolving needs. And you can see evidence of our strengthening performance and the initial benefit of the Cooper combination in each of our SBUs.

In the Americas, our U.S. consumer business took advantage of favorable conditions in the replacement market where we continue to see robust demand for our most premium products. Our large-rim-diameter volume performance was particularly notable with our growth exceeding the industry by nearly 10 points. The resulting mix benefits, combined with pricing actions, more than offset higher raw material costs.

Our U.S. commercial business is also capitalizing on strong end-user markets. With freight demand outpacing supply, keeping existing trucks road-ready is a top priority of fleets. As a result, more customers are relying on Goodyear’s Fleet Central to make informed decisions regarding their tire and maintenance needs. The growing popularity of our suite of fleet management tools is helping us drive market share in targeted segments. In the quarter, our commercial shipments were nearly 15% above the second quarter of 2019.

Turning to Brazil. Our consumer and commercial replacement businesses are recovering faster than anticipated. Shipments in both segments were well above pre-pandemic levels during the quarter, reflecting both economic recovery and share gains. Our resilient OE business, however, saw more than half of the country’s auto assembly facilities taking capacity offline during the quarter keeping our OE volume considerably below pre-pandemic levels.

In EMEA, markets are also recovering, albeit, with less consistency than in the Americas, with industry demand softening sequentially. We sustained our relative momentum in the quarter with share gains in all of our businesses. Our European consumer replacement business more than recovered higher raw material costs, supported by the impact of our distribution changes. At the same time, our market share in Europe has recovered by more than 0.25% year-to-date.

Our consumer OE business also continued outperforming, but with less impact as parts shortages limited recovery in auto production. Our continued improvement in the consumer OE segment is supported by our ability to meet the demands of electrification. Today Goodyear has a presence on nearly half of the EV platforms produced in Europe. Having this leadership position is critical as electric mobility begins a period of dramatic growth. And as tires on most EV’s were faster than on a comparably sized internal combustion-powered vehicle, these benefits will extend well beyond the initial fitment. So what we’re seeing are dynamics that should position our consumer business for long-term profitable growth.

Turning to commercial. Volume was more than 10% above 2019 levels, despite lower freight volume. We benefited from exceptionally strong results in the On-Road segment, driven by our growth portfolio fleet customers. During the quarter, for example, we had to test those [Phonetic] fleet of 6,800 trucks and trailers to our customer portfolio. Tires alone are no longer enough to win over fleet customers. Today’s fleets demand innovative solutions that will help them maximize uptime and reduce costs. We recently unveiled Goodyear DrivePoint, the latest productivity tool in our total mobility offering. DrivePoint combines on-valve sensors, battery-powered receivers and mobile apps to deliver fleets a cost effective way to monitor tire performance. These technology solutions strengthen our position as a preferred provider of monitoring and predictive maintenance making Goodyear more valuable to our customers and preference over other mobility solution providers.

Turning to Asia Pacific. Industry demand vary significantly by country. Challenging conditions persisted in India, Malaysia and other countries with low vaccination rates affecting demand and our production in the region. In China, the story was encouraging with demand fairly consistent with pre-COVID levels. In a stable market, we leveraged and expanded retail network to grow our consumer replacement volume by more than 20% compared to the second quarter of 2019. Turning to our consumer OE business. We grew our volume more than 40% compared to the prior year in an expanding market. Our team did an excellent job in this environment, helping us capture nearly 1 point of market share.

In addition to delivering solid second quarter results, we continued advancing our mobility solution strategy. In June we launched Goodyear SightLine, the first Tire Intelligence solution for cargo van fleets; a timely launch considering the impact the pandemic had on e-commerce volumes. Goodyear SightLine combines sensors and cloud-based algorithms to provide fleet operators with real-time tire health information. This rollout place further groundwork for connected tire future.

We’re also taking steps to make our mobility solutions more accessible. Last month, we announced a strategic partnership with ZF to jointly offer our Goodyear connected tires with ZF’s telematics solution. By using a common telematics unit, we can simplify fleet interactions making it easier for customers to get the tire and trailer performance data needed to optimize vehicle use and reduce fuel consumption and emissions.

As I’ve said before, Goodyear is committed to shaping the mobility revolution. Initiatives like [Indecipherable] Goodyear SightLine and partnerships like the one we have with ZF, along with our focus on the intersection of new mobility, sustainability and technology are demonstrative of new business models and solutions that will define Goodyear’s position and relevance for the next 120 years. We view our job as requiring the operational excellence to deliver results today, while simultaneously building the capability to lead our industry tomorrow when the tire’s relevance will not just continue, but evolve to a more prominent role to enable mobility. It remains a great time to be a technology leader in the tire industry.

We’re entering the second half of the year, focused on the opportunities ahead. Markets are more stable and at the beginning of the year, particularly in the aftermarket. Fundamentals are robust in U.S. consumer replacement with dealer restocking and increased driving underpinning demand. In Europe, the demand picture continues to improve, led by recovery in vehicle miles traveled as more employees return to the office. And the need to keep goods flowing through supply chains is driving the demand for commercial tires around the world. And while supply chain constraints continue to limit auto production, the outlook for our consumer OE business remains favorable, given our ongoing share recovery, the long-term need for OEs to restock dealer inventory and the accelerating shift to electric powertrains, which favors Goodyear’s strengths and product design and materials.

Against this backdrop, we’re focused on sustaining our momentum, while working to integrate Cooper. The trajectory of our markets makes us feel good about the timing of the combination. We look forward to achieving our full potential in the years ahead.

Now, I’ll turn the call over to Darren.

Darren WellsExecutive Vice President and Chief Financial Officer

Thanks, Rich. Our results in the second quarter were again a reflection of strong performance by our team and their focus on continuing our recovery market share, improving our manufacturing cost, and managing for cash, and pursuing all of these while also delivering strong price/mix to address rising raw material costs and inflation and many other cost categories. These results also illustrate the momentum built up over the last year across our consumer replacement OE and commercial truck businesses. And as of June 7, we had the momentum that the Cooper team has developed to the overall equation, creating even more opportunity going forward. We’re excited to have completed the combination so quickly, giving our teams a chance to work more closely together and accelerating the opportunity to deliver the full benefits of the transaction.

While our team is delivering, we have to acknowledge the added volatility we’ve experienced at our end markets during the second quarter. We saw lower OE production than we anticipated; a problem that seems likely to persist longer than originally thought. And we saw increased disruptions in our emerging markets businesses; some COVID-related, particularly in Asian markets; and some the result of social unrest with significant impact on our South Africa and Colombia manufacturing facilities; and still others reflect — were reflecting the difficulty of shipping products to markets like the Middle East, where we don’t have a manufacturing presence. Overall, this slowed down the global volume recovery temporarily, but the pent-up demand in these markets will be a source of further growth over the coming months.

Operationally, our team has done a great job keeping our factories fully supplied. So while we continue to see escalation in raw material prices, we have seen no impact of material supply on our production. Consistent production has been critical in serving markets including Latin America, Europe and China and particularly the U.S., where replacement tire demand remains very strong. So as we enter the second half of the year, we’re feeling very good about the industry outlook and our ability to outperform the industry, while continuing to see our profitability trend toward target levels.

Before I begin reviewing the financial results for the quarter, I want to highlight a couple of items that are going to seem a little bit different, given we’re incorporating for the first time some Cooper results. First of all, our results reflect the impact of Cooper sales from June 7 through June 30. This means there is a little over three weeks worth of Cooper sales and volume reflected in our company results, as well as in each of our business units. We’ll provide disclosures that clarify the impact of these added sales, which overall were just over $250 million for the quarter.

Second, results reflect a number of items related to the transaction itself. This includes costs directly related to the transaction, as well as accounting treatments that are required in such combination. In order to provide a view of results without these items, we are providing a calculation of our earnings that excludes them. We’ve typically shown adjusted net income and EPS. But this quarter we have merger-adjusted SOI as well. The most significant item from the Cooper transaction impacting SOI is the mark-up of Cooper’s June 7 inventory to market value, which means much higher cost of goods sold on those units as they’re sold out in Q2 and Q3. This makes up $40 million out of the $50 million of Cooper-related items hitting our segment operating income in the quarter.

With that preamble, let’s turn to our income statement on Slide 8. Our second quarter sales were $4 billion. This is now above pre-pandemic levels from 2019, even without the incremental sales from Cooper. Unit volume increased 84% from last year’s second quarter, reflecting continuing industry recovery, market share gains and the addition of Cooper units. Second quarter’s segment operating income of $299 million was well ahead of last year and also well above 2019. Second quarter merger-adjusted segment operating income of $349 million exceeded our results from 2018, as well. This included merger-adjusted Cooper Tire income of $34 million.

Our second quarter results were also adversely affected by the carryover impact of a winter storm in the U.S. in the first quarter, which reduced our Americas segment operating income by approximately $24 million. After adjusting for the impact of the storm and other significant items detailed in our press release, including the impact of the inventory step-up adjustments, our earnings per share on a diluted basis were $0.32, up from a loss of $1.87 a year ago.

The step chart on Slide 9 summarizes the change in segment operating income versus last year. Similar to the last quarter, we also included an analysis versus 2019 on Slide 10 to help you better track our recovery. Compared to the COVID-impacted year-ago period, the total impact from higher volume was $531 million, reflecting the benefits of higher unit sales and increased production.

Price/mix improved by $159 million compared to a year ago, more than offsetting a $30 million increase in raw material costs. While this is a significant net benefit in Q2, the increase in raw materials will be much higher beginning in Q3.

Cost savings of $86 million included $25 million associated with the closure of Gadsden, as well as the benefit of an indirect tax ruling in Brazil. Aside from these benefits, savings were limited as many of the one-time savings implemented during COVID did not recur this year.

Inflation of $41 million was higher than the first quarter and is beginning to reflect increased cost pressures across multiple categories. The $37 million improvement in the Other category reflects a $94 million increase in the earnings generated by our other tire-related businesses, as well as a $17 million benefit from improved profitability at TireHub, which recorded its first profitable quarter. These factors were partially offset by higher advertising and R&D expense as we restored investments in these areas after severe cutbacks during last years COVID shutdown.

You’ll notice, we added two columns to the step chart to clearly illustrate the impact of the Cooper Tire transaction on our results. The first bar captures Cooper’s operating income between the June 7 closing and quarter-end. The second bar reflects the impact of costs triggered by the business combination, including the effects of fair market value step-up on Cooper’s inventory and certain other assets. These costs totaled $50 million in the quarter, more than offsetting the $34 million of merger-adjusted operating income Cooper contributed during the 3.5-week period.

While Cooper stand-alone results are no longer reported publicly, Cooper also performed very well during the second quarter. Operating profits and margins were stronger than in their comparable 2020 and 2019 periods with increased volume and improvements in price/mix driving the results.

Turning to the balance sheet on Slide 11. Net debt totaled $6.9 billion, increasing less than $1 billion from second quarter of 2020 despite cash consideration of over $2 billion paid to close the Cooper transaction. The impact of the merger consideration was partially offset by free cash flow generated during the last 12 months and Cooper balance sheet cash at closing. Completion of the Cooper Tire merger impacts the comparability of our working capital to prior periods. Controlling for this impact, we made some progress rebuilding our inventories in Q2. However, we have a way to go before reaching levels that are aligned with demand, especially in North America.

Slide 12 summarizes our cash flows for the quarter and for the trailing 12-months that helped us deliver our stronger-than-expected balance sheet position.

Turning to our segment results, beginning on Slide 13. Unit volume in the Americas increased 125% from a year ago. Our replacement business, which was up 8.6 million units continue to benefit from higher unit sales through Walmart’s Auto Care centers. You’ll recall that the closure of these locations greatly impacted our relative performance last year. Our OE volume increased 1.9 million units, reflecting the pandemic’s impact on auto production last year. While semiconductor shortages continue to affect our customers’ production schedules, our OE business is positioned to capitalize on the stronger demand that will follow, given our high fitment win rate in recent years.

Americas segment operating income totaled $233 million, up $520 million from the year ago. Excluding the impact of the Cooper transaction, segment operating income for the Americas would have been $247 million. Americas results include $31 million in merger-adjusted operating income from Cooper and $45 million of costs triggered by the merger, including a $35 million impact of the Cooper Tire inventory step-up. Americas earnings benefited from higher volume, improvements in price/mix and continued recovery in our other tire-related businesses. These factors were partially offset by payroll and advertising expenses returning to more normal levels after last years COVID-19 response actions, as well as by higher raw material costs.

Turning to Slide 14. Europe, Middle East and Africa’s unit sales totaled $12 million, up 63% from last year. Replacement volume increased $3.2 million, reflecting stronger demand for both consumer and commercial tires. Market share gains in both segments also contributed to the growth. Our OE business was up 1.5 million units, reflecting a partial recovery in the industry demand and the benefits of recent fitment wins, including some significant electric vehicle platforms. EMEA’s segment operating income of $43 million was up $153 million versus last year on higher volume, improved factory utilization and improvements in price/mix. As expected, EMEA’s earnings moderated compared with Q1, reflecting typical demand seasonality and the absence of some unique factors that positively impacted the first quarter.

Turning to Slide 15. Asia Pacific’s tire units totaled 6.5 million, a 43% increase over the prior year. OE volume increased 800,000, reflecting a partial recovery in industry demand. Total replacement volume increased 1.1 million during the second quarter. We maintained strong growth in the Chinese aftermarket as our actions to strengthen distribution continued to deliver both volume and price/mix. Excluding the impact of the Cooper transaction, our consumer replacement volume in China during the quarter was up more than 20% from the second quarter of 2019. Segment operating income was $23 million, up $57 million from the prior year’s quarter, reflecting higher volume and improvements in price/mix.

Turning to our outlook items on Slide 16. We expect continued volume recovery in Q3 and you should see our volume move closer to pre-pandemic 2019 levels than we saw in Q2. For reference, Cooper’s volume in Q3 2019 totaled approximately 10 million units. We expect production to remain at or near pre-pandemic levels, given our need to replenish inventory. Similar to Q2, the cost benefit related to higher production will impact us immediately, given the accelerated cost recognition related to low production in Q3 2020. We expect price/mix will continue to more than offset raw material costs, reflecting the benefit from recent pricing actions and improved mix. Net cost savings will reflect the impact of the non-recurrence of last years COVID-related temporary fixed cost reductions, as well as incremental transportation and labor costs.

One other note, given that Q3 will include a full three months of Cooper results, if you’re using Cooper’s Q3 2020 to help you model your expectations for this year, remember that Cooper recorded a $49 million favorable adjustment to its product liability reserves in the third quarter of 2020.

Slide 17 summarizes several of our full year financial assumptions. Based on current spot prices, we now expect raw material costs to increase $425 million to $475 million net of cost savings. Slightly less than half of the cost increase is expected in Q3. This $100 million increase from the outlook we provided on April 30 only represents the impact on legacy Goodyear operations as we intend to report Cooper’s contribution to our segment operating income as a stand-alone item at least through the middle of next year.

We’ve provided updated figures for several other financial assumptions. In nearly all instances, the change compared to the previous estimate reflects the impact of the merger. However, we’ve refined our forecast for rationalization payments to reflect our latest thinking on the cash required this year to finish executing our German modernization plans.

Lastly, our reported results will continue to be impacted by non-cash costs triggered by the merger, including amortization of the Cooper Tire inventory step-up and incremental amortization of Cooper Tire intangible assets. On a pre-tax basis, our provisional estimates is for these costs to be about $85 million in Q3 and approximately $15 million to $20 million for Q4.

Now, we’ll open up the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question today comes from Ryan Brinkman with J.P. Morgan. Please go ahead.

Ryan BrinkmanJ.P. Morgan — Analyst

Hi, thanks for taking my questions. I wanted to ask how you’re feeling about your relative pricing power and ability to therefore offset commodity cost headwinds, maybe in the context of a few factors that I thought might be important, but, of course, any other factors you think might be important, maybe starting with where we are at with regard to consumers’ average tread depth on their tires. I think that you likely have some good insight into that, given the large number of retail stores that you operate. So what are you seeing there as miles driven recover? And then if maybe replacing tires is something that Americans deferred earlier during the pandemic, but maybe now need to catch up on making those purchases somewhat less discretionary.

Another factor I thought to ask on, if it’s important, is all of the monthly child tax credit and other transfer payments that many Americans are now receiving, whether that could help. And then lastly, the increased equity that consumers have in their used vehicles, right? So the Manheim Index is up a little bit today but if used cars are worth 35% more than before the pandemic, does that help rationalize purchasing a new set of tires and maybe paying a little bit more for those tires if the vehicle itself is so much more valuable? How do you think these or other factors will play into your ability to implement and to stick the price increases that are required to offset raw material inflation?

Richard J. KramerChairman, Chief Executive Officer and President

So, Ryan, there is a lot there, but I think all really headed in the same direction, and I can start by saying everything that you’re talking about, I think, is manifesting itself in a positive way in the market right now. Demand is good, particularly in the U.S. Sellout is good and we think that’s something that’s going to continue on going forward. If you sort of peel back what you said, in terms of tread depth, we’re not seeing anything really unusual in terms of more worn out tires. It’s been pretty consistent and I can tell you that’s really been pretty normal. The last time we saw really, really worn out tires coming in was in the Great Recession. Since then it’s been fairly consistent. So I wouldn’t say that, that alone is driving anything.

Having said that, your comment about child credit or other government programs putting money in individual’s accounts, I’ll tell you, we always see correlations between things like tax returns or tax refunds coming back into people’s accounts and we see that spending manifesting itself out in our channels, a number of them and particularly across some of the mass market, the mass merchandisers as well that we deal with. So there is definitely a correlation with that going forward.

And from a used tire — excuse me, a used vehicle perspective and the increased value in used vehicles, I would also tell you that, yes, absolutely, I think as people keep their vehicles longer, the importance of tire from a safety perspective and the fact that they’re keeping it longer not turning it back, not leasing, not sending it back on lease or whatever it might be, also plays in people’s minds to make sure they have a good set of tires on their vehicle and again that’s playing out through all our channels. Whether it’s through our own retail stores, through some of our franchisees, through some of the large regional retailers, as well as some of the mass channels, I think we’re seeing that benefit of used vehicles staying on the road a bit longer and now actually being worth a little bit more since you can’t replace it with a new car. So all those are trends moving in the right direction.

Now, taking a step back, on price, I will tell you during the second quarter, we again saw a net recovery of price over raw materials and that’s a continuing trend that we’ve seen now for multiple quarters. It’s a good trend that’s going forward. If I break it down for you a little bit, they will start in the U.S. in consumer. And as you might imagine, we monitor what’s happening in the market, as well as for our competitors. In the quarter, we certainly saw the replacement industry pricing move higher and as we do our monitor of key competitors, key consumer tire producers out there, I would tell you we saw at least two price increases since November, sometimes three, and those are in the range of about 5% to 8%.

And for Goodyear, earlier this week, we just announced in our consumer replacement business an up to 8% price increase effective September 1 on both the Goodyear and the Cooper brand. And, remember, for us, that’s about our fourth one recently. We did — you may recall, we did up to 5% going back to December 1 and we did up to 8% both effective April 1, as well as June 1. And if I peel Cooper back a little bit as well, they’ve taken price increases about up to 8%, one in January, one in May and one in July.

And if I go to the commercial markets in the U.S., very similar. If we look at the commercial truck tire producers, we’ve seen significant increase as well in that range of 5% to 8%. From a Goodyear perspective, we’ve gone effective price increases up to 6% on November 1 as well as April 1 and then up to 12% this past July 1. So, I’d say that that’s reflective of what’s happening out in the marketplace in terms of our input costs and the demand versus supply dynamic.

In Europe, I’d say, again, we are seeing price increases. Most tire companies announced prices — excuse me, now ahead of the winter season. We have a summer-winter market there, as you know. So we did see that and those announcements are really similar to the price actions that were taken ahead of the summer and all season sell-in at the end of — right around Q1. So that’s a positive trend that we’re seeing. From a Goodyear perspective, we implemented a price increase up to 4% to 5% on winter and an additional 2% to 3% on summer and all season at the end of the first quarter. So good trends there as well. And also we’re seeing the same thing happening in the truck markets there.

So if you add all that up, I would say, certainly that the pricing actions that were taken in recent months, clearly, better position us to handle what we see, as Darren mentioned, those second half higher raw material cost and that cost inflation that’s going to hit us. So all in all, very constructive environment out there.

Ryan BrinkmanJ.P. Morgan — Analyst

That’s helpful. Thank you. And then my last question is, I’d always been fairly impressed by Cooper Tire’s ability to fund their research and development of tires, including more expensive high-value-add tires in order to effectively compete with other tire manufacturers that were really multiple times larger and more global than they were and with more financial resources and yet still generate the margins and returns that they did. Do you think that Cooper’s culture had an element of thriftiness to it or sort of doing more with less? And, if so, how do you ensure that the combined organization can learn or benefit from different aspects of the Cooper culture going forward?

Richard J. KramerChairman, Chief Executive Officer and President

So, Ryan, Darren and I will tag team a little bit here, but I would say you sort of summarized some of the positives that Cooper has and why they were so attractive for us to do the deal that we did with them. Clearly, they have very — as I mentioned in the beginning of my remarks, very talented people, very effective, great product line, a great go-to-market strategy through the channels that they deal with. And I would say what we thought we’re probably seeing — we’re even more impressed with what the people can do there, the teams can do there. Great to have them on board, great to have them to be part of the team.

As we said from day one, clearly, I think that we bring some things to the party but, equally, they can teach us some things in some of that effectiveness, some of the way they do their developments, we’re all ears and we’re going to learn together from them. So our job as part of integration, and maybe this is where I’ll turn it over to Darren, is to make sure that we don’t — we not only don’t lose that element, but that we actually create an environment where we can benefit from it going forward. That’s the plan.

Darren WellsExecutive Vice President and Chief Financial Officer

I think, yeah, I guess, maybe echo the point is that everything we’ve seen over the first eight weeks post closing has reaffirmed the things that we are excited about in the combination and has further built the confidence that we have and the value we can create here. We announced with the transaction that we would expect to realize at least $165 million — or we would deliver $165 million of run rate cost synergies within two years. I think we expect to realize at least that, along with the additional cash and tax benefits. And there’s a number of various — how those synergies will come from, but it does include — and I think part of the reason we’re being methodical right now is, it does include making sure that this is a process of taking the best of both worlds. So it’s not applying Goodyear approaches to Cooper’s business. It is looking at each each group and each functions, practices and making sure we’re picking the right ones and I think the ability to do some things operationally with lower cost and less resources is one of the key learnings that we’re going to have from the Cooper team.

Yeah, so I think we’re ultimately listening very carefully. Right now, we’re going through effectively a three-month process with the integration, leaders from each side, to develop more detailed plans. And once we move past that process, yeah, I think we’re going to be able to start to share more of the specific insights and more of the specific areas of opportunity to provide some more details. We’re — yeah, we’re not in a position to do that today, but I think moving forward, we’re going to have an opportunity to update you and share with you, not just the general points that we’re making today, but some of the specific areas where we’re seeing opportunities like the one that you mentioned.

Ryan BrinkmanJ.P. Morgan — Analyst

Great to hear, thank you.

Darren WellsExecutive Vice President and Chief Financial Officer

Thanks, Ryan.

Operator

Next question is from Rod Lache with Wolfe Research. Please go ahead.

Rod LacheWolfe Research — Analyst

Hi, everybody.

Richard J. KramerChairman, Chief Executive Officer and President

Hi, Rod.

Rod LacheWolfe Research — Analyst

Hey. So pricing is really just a great barometer of what’s happening in terms of supply and demand, but I was just wondering if we should also be considering the potential for mix to moderate a bit once light vehicle production accelerates just since the OE has historically been a little bit less profitable versus replacement. And also relative to that — the weaker OEM demand right now, is that helping the industry rebuild inventories on the replacement side or are inventories on the replacement side still pretty tight?

Darren WellsExecutive Vice President and Chief Financial Officer

So, Rod, let me take your last question first here. And I do think that there is some evidence of channel inventories recovering, in that, we — the industry’s sell-in, which is up about 12% from the 2019 levels, is above the sell out, which is up mid-single-digits. So, it’s still very good. But I think, certainly, and it’s a little bit — it’s been a little bit ahead of sell-out which has meant that we are making some progress restoring inventories in the channels. Unfortunately, we have not made any progress yet or a significant progress in North America restoring our old inventory, which for us to have the right level of service, we still need to do. So there is — there’s going to be a need for us to keep producing essentially everything that we can produce. But, I think that the question of recovery of OE volume and what impact that will have on our mix, it is a fair point. It seems like that recovery in OE volume is going to happen over a longer period of time than we might have originally thought just given that the semiconductor issue seems to be turning out to be more protracted than might have originally been expected. Yeah, so I think ultimately that’s helpful.

But I think there’s two other things that I think we are upbeat about and that is that we’ve been recovering share of fitments in OE. Our win rate over the last two or three years has been real positive and we had expected to be rebuilding our OE market share. So as we get to the point where the OEs are catching up on production and restocking their dealers, they’re going to be doing it at a time when we’ve got a greater share of the vehicles being built. So I think that, that delay, if anything, might help us a bit.

The other thing that I think is ultimately a real positive here, and it does get straight to the question of OE economics, and that is the economics of electric vehicles. And we — I mean, it’s now a couple of years ago that we first talked about a couple of the key factors that are making this, as Rich put it, such a great time to be a technology leader in the tire industry and that is, with the electric vehicle trend, our win rate on electric vehicle fitments is significantly higher than it has been in general, historically. So I think when we talked about it two years ago, we said were getting — we were winning on about two-thirds of the fitments that we were bidding on for electric vehicles. And, as you might expect, that’s dropped down a bit, but our most recent read is that we’re still winning, winning volume on about 60% of the fitments that we’re bidding on and which is, I mean, a real testament to how good a job our OE teams have been doing, meeting the performance in the tech specs for the increased weight, the higher torque, vehicle dynamics. So that continues to be a real benefit.

The other key statistic I think that we — and I guess maybe all of that is driven by the fact that there are only about half the number of competitors for these fitments that we have had on internal combustion engine fitments, historically. So, I mean, fewer companies bidding. The other thing, and this is a positive move even compared to two years ago, because I think two years ago, we were looking at electric vehicle fitments and saying the revenue per tire on those fitments was about 15% higher than the equivalent ICE vehicle. So that 15% was essentially a revenue premium. That revenue premium is more than double that amount today. And I think part of that is that the average electric vehicle size has been growing and there’s more SUVs and trucks in the mix and therefore more complexity in the fitment.

But this is something that we’ve circled back here analyzing the situation post-COVID and particularly with all the push toward electric vehicles. And just — we’re really seeing some positives there for our own business and our future mix. And obviously with those vehicles tending to wear out quicker, that eventually has benefits for us in the replacement market as well. So I know that, that may have gone a bit beyond the specifics that you were asking about on the OE versus replacement, but I think the trends within the OE business are worth reflecting on, and I think there’s a lot of positives there.

Rod LacheWolfe Research — Analyst

Great, thanks. And just two really quick ones — hopefully, quick. A lot going on this morning, so it’s possible that my quick math is wrong, but are you already converging now on that original 8% SOI margin target for Goodyear? And second, just if you can just give us a sense of the cadence of synergies with Cooper Tire, just what are the key actions that are being taken. How should we think that — how should we expect that to sort of getting rolled in?

Darren WellsExecutive Vice President and Chief Financial Officer

Yeah. So, Rod, on synergies, I think inevitably there are going to be some savings that we’ll get this year because there are some things that effectively happen right away. I mean, there are some positions that were — effectively went away immediately because of the — having one public company instead of two public companies. The tax savings opportunities began right away. But I referenced the detailed planning process that our teams are going through and we’re — we have literally hundreds of synergy ideas that the teams have identified that we’re looking at and we’re developing work plans around. So hard to get too detailed about the cadence and I don’t think that the larger part of those savings are going to be happening in the second half of this year. I do think that we’ll get a large part of those synergies during 2022. And once we get past this initial planning process, I think we’ll be able to start to share what that cadence might look like in 2022 versus 2023 and even how it might evolve during 2022. So we’ll — I’d love to save that one for future call.

Back to your first question, I would have been disappointed if you didn’t ask it, which is sort of our trend toward the margin targets. So we’ve said that — and we’ve talked about on prior calls, the fact that with some of the actions we’re taking, we saw our way to [Indecipherable] getting back over 8% in sort of the near to intermediate term. And I guess we’re looking at it now and saying there are different ways that we could look at this and obviously we’ve introduced merger-adjusted segment operating income, but we’ve got a quarter here for over the 8%. If we take a look at those adjusted numbers, we’re — anyway you cut it, I think our first half is at 7.5% and our trailing 12 is over 7%.

So I think the trend is all in the right direction. And I think we’re feeling very good about our ability to be over that 8%. I mean, we’re not –I think we won’t feel like that is accomplished once we’re able to get full 12 months held over the 8% mark, so I think we’re close, but not quite there. But I think we continue to see the opportunity even in the legacy Goodyear business to move from that, sort of, approaching 8% back toward double-digits.

And then if we add Cooper in — and I realize that we have our own internal views, but just with the numbers that Cooper filed in their 8-K, they were over 11% EBIT to sales this year. So we add in their margins, then obviously that’s an additional increment to what we’ll be able to deliver on a combined company basis. So I think, overall, we’re feeling good about that. Progress is feeling very good, certainly the recovery of the shortfall in raws versus pricing — price/mix versus raws is very good for us as well.

Rod LacheWolfe Research — Analyst

Yeah, yeah, that’s really good. Thanks for that, Darren.

Darren WellsExecutive Vice President and Chief Financial Officer

Thanks, Rod.

Operator

The next question is from John Healy with Northcoast Research. Please go ahead.

John HealyNorthcoast Research — Analyst

Hi. Thank you. And congrats, guys, on the…

Richard J. KramerChairman, Chief Executive Officer and President

Good morning, John.

John HealyNorthcoast Research — Analyst

Morning. I’d be remiss if I didn’t say congrats on the quickness in terms of how you closed the deal and just the progress in the second quarter. Wanted to ask, though, a little bit about Cooper strategy going forward. With 60 days under your belt with the asset, any initial thoughts on distribution either at retail or in the wholesale market? Obviously, a part of Cooper strategy was to get bigger in the mass merchant channel, and obviously you guys do well there. So, kind of, any sort of expectations we could set for how Cooper might be playing into that channel?

And then, secondly, with the relationship with HV [Phonetic], obviously, you guys moved away from that channel and that player two or three years ago. Any thoughts in terms of how Cooper might continue to operate with that entity going forward?

Richard J. KramerChairman, Chief Executive Officer and President

Yeah, John, I think, good questions and I would say at this point it’s too early for us to answer that with any specificity. I’ll go back to what Darren outlined earlier is our integration process is a very thoughtful and methodical process that we’re going to, to make sure that we achieve and overachieve what we said we were going to do. I will tell you, though, your thought process is absolutely the right one. We see this as beneficial for our customers and for consumers to expand the Cooper line, particularly in certain tire lines, but also in terms of the channels that they go to. We see lots of opportunities to get the efficiencies on the go-to-market strategy as well. And I think that exactly how that plays out is something that we are spending a great deal of time on. We’re, I would say, no less encouraged, we’re actually more encouraged at the opportunities that we see and I think you’ll hear us talk more about that with the specificity you’re looking for as we get through the integration process. So I think you’re thinking about it right, but we’ll just — we’ll hold off to lay the details out to a bit later.

John HealyNorthcoast Research — Analyst

Understood. And just wanted to ask a little bit on sourcing. Darren, I think you made a comment in your prepared remarks about how you’re comfortable with the situation. But there is a fair amount of speculation and industry, kind of, noise out there about natural rubber and potentially multi-year shortages on that side of things. So — and I would love to get your perspective on what’s going on there and how problematic is some of the conditions in Asia with flooding and tree disease on the supply chain. And can you utilize synthetic rubber more to kind of offset if that situation does become as complicated as some speculate on?

Darren WellsExecutive Vice President and Chief Financial Officer

Yeah. So, John, you remember it correctly that we have — there is a reasonable amount of substitution flexibility that we have moving from natural rubber to synthetic rubber and moving back the other way. And we utilized that in the past and generally we’ve utilized it to address price differential between natural rubber and synthetic rubber. In fact, right now, the prices of the two aren’t too much different. And we have not really had any significant availability issues on either product. That doesn’t mean our teams aren’t working very hard to make sure that that’s the case, and certainly they are and certainly the winter storms that went through the Texas Gulf Coast tightened up supply for petrochemicals, generally, and transportation has been really the challenge on natural rubber, more than availability. It’s just a matter of getting containers and being able to transport the rubber from Asia and other rubber-producing areas to the locations where we have factories. Yeah, I don’t really think we’re — I mean, at this stage, our view is not that we have any sort of long-term supply issue to deal with and I think the natural rubber prices probably reflect that, and they’ve been relatively stable.

The real questions, I think, have been around the petroleum-based products, and we did go through a period of time where there were some — where supply was very tight. And now we’re going through a period of time where oil prices are up. And, obviously, there is an environmental overhang for the production of some of these products. So, yeah, I think we continue to do work there. Our procurement team and our operations teams, they have had to take some new approaches and think about new transportation modes and even different supply lines and expand our group of suppliers in order to make sure that we’re addressing the long-term need to ensure availability. And I think they’ve done a good job on that. But at this point, we really have not seen a lot of — we haven’t really seen any disruption coming from it.

Richard J. KramerChairman, Chief Executive Officer and President

Hey, Darren, I’m going to just jump in on two points, and one just to echo the comments, our Chief Procurement Officer, Maureen Thune and her team have just done a fantastic job, making sure we don’t have any of those supply issues by really being forward-thinking and too many people to name, but our supply chain teams all around the world have done just a great job to make sure that our plants are functioning and staying open even via — in business continuity mode from time to time.

And, John, just the second point I would make, the near-term material situation is exactly like Darren described. I would also tell you, though, longer term — I mean, mid-term and long-term, we’re also focusing, from a sustainability perspective, on other material replacements. You’ve heard us talk a lot about rice husk ash and soybean oil and those are really great additions to make a more sustainable tire, but our goal is to make a tire fully sustainable tire by 2030 as we go forward and before that ideally. So we’re working on a lot of things to create different type of materials that we use, which will have an impact certainly on the traditional materials that we have as well. So nothing to speak about now, but I would put that sort of in your thinking as you think about material that goes into tires and what’s happening around the world as well.

John HealyNorthcoast Research — Analyst

Great, thank you, all.

Richard J. KramerChairman, Chief Executive Officer and President

Thanks, John.

Operator

And our next question is from Victoria Greer with Morgan Stanley. Please go ahead.

Victoria GreerMorgan Stanley — Analyst

Good morning. [Speech Overlap] for me, please. Firstly, on price/mix versus raw materials. Obviously, very helpful to be guiding for that to be positive in Q3. Could you give us a feeling for the potential magnitude of the positivity versus the very big $130 million that you’ve seen in Q2? And could you also talk us through a bit, how you see that net for Q4 and as well in your raw material guidance, how would you think about that split roughly between Q3 and Q4? And the second thing, on the Cooper transaction, the $50 million of one-off that we’ve seen in Q2, is that really just something that is a one-time issue that happens in the closing of the deal, or do we have to think about those kinds of numbers happening again in the second half? Thanks.

Darren WellsExecutive Vice President and Chief Financial Officer

Yeah, yeah. So the — yeah, Victoria, let me handle your last question first. We’ve put a couple of notes here on Page 17 in our slide deck to address the impact of these merger-related costs and, in fact, the biggest impact is going to come in — on those merger-related cost will come in Q3. So we’ve got about $85 million of those costs in Q3 relative to about $50 million that we had in Q2. And between Q2 and Q3, that will take care of the impact of the mark-to-market of Cooper’s inventory on June 7 and that was the single biggest factor. There are some ongoing costs, including the mark-up for intangible assets that have to be amortized, and that’s one of the other elements and that’s the one that is ongoing. So that, I think, is the way to think about that. So once we get to the fourth quarter and we’ve got that — the effectively $15 million to $20 million of those merger-related costs in Q4, that’s more of the ongoing. Yeah, so that’s more of what you would see going into 2022 as well.

The — on the price/mix versus raws question, I think, I guess, first point is, I think, we’ve — I think we’ve got confidence that we’re going to be able to manage the situation through the fourth quarter as well and continue to work to keep price/mix ahead of raw material costs. Fourth quarter raw materials will be a bit higher than the third quarter. So, if we take our guidance on raw material costs for the year of $425 million to $475 million, if I take the midpoint of $450 million, we saw $15 million of that in the first half. So that means about $435 million for the second half. And we’ve said — we said in our remarks today that less than half of that would be affecting the third quarter.

So, the impact on raw materials in the third quarter will be less than half of the $400 million [Phonetic]. So I’ll let you — we’ve said slightly less, so we’ll let you make your own assumptions there. But, yeah, I think that you can make the assumption that there is going to be something approaching a couple of hundred million in the third quarter of raw material costs. And we’ve said we’ll be able to get our price/mix above that level to keep the number positive and then there would be another increment going into the fourth quarter. So that means price/mix would have to take another step-up in Q4 to continue to stay ahead of raw materials.

Victoria GreerMorgan Stanley — Analyst

Great, thanks very much.

Darren WellsExecutive Vice President and Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]

Duration: 59 minutes

Call participants:

Nick MitchellSenior Director, Investor Relations

Richard J. KramerChairman, Chief Executive Officer and President

Darren WellsExecutive Vice President and Chief Financial Officer

Ryan BrinkmanJ.P. Morgan — Analyst

Rod LacheWolfe Research — Analyst

John HealyNorthcoast Research — Analyst

Victoria GreerMorgan Stanley — Analyst

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Westport Fuel Systems Inc. (WPRT) Q2 2021 Earnings Call Transcript https://tyntescastle.com/westport-fuel-systems-inc-wprt-q2-2021-earnings-call-transcript/ https://tyntescastle.com/westport-fuel-systems-inc-wprt-q2-2021-earnings-call-transcript/#respond Mon, 16 Aug 2021 12:05:49 +0000 https://tyntescastle.com/?p=840

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Westport Fuel Systems Inc. (NASDAQ:WPRT)
Q2 2021 Earnings Call
Aug 06, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by. This is the conference operator. Welcome to the Westport Fuel Systems second-quarter 2021 results conference call. [Operator instructions] I would now like to turn the conference over to Christine Marks, Westport’s investor relations representative.

Please go ahead.

Christine MarksInvestor Relations

Thank you, and good morning, everyone. Welcome to Westport Fuel Systems second-quarter 2021 conference call, which is being held to coincide with the press release containing Westport Fuel Systems financial results that was distributed yesterday. On today’s call, speaking on behalf of Westport Fuel Systems is chief executive officer, David Johnson; and chief financial officer, Richard Orazietti. You are reminded that certain statements made in this conference call and our responses to various questions may constitute forward-looking statements within the meaning of the U.S.

and applicable Canadian securities laws, and as such, forward-looking statements are made based on our current expectations and involve certain risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements. So you’re cautioned not to place undue reliance on these statements. Information contained in this conference call is subject to and qualified in its entirety by information contained in the company’s public filings.

I’ll now turn the call over to you, David.

David JohnsonChief Executive Officer

Thanks, Christine. Good morning, everyone. Thanks for joining us to review Westport Fuel Systems results for the second quarter of 2021. This is David Johnson speaking.

Richard Orazietti is also on the line with me today. I’m speaking to you from our headquarters in Vancouver, British Columbia, which has experienced record-setting temperatures this summer and rampant forest fires that have claimed lives and devastated homes and families. Beautiful British Columbia isn’t as beautiful is meant to be. And we aren’t alone flooding and other extreme weather events have affected people around the world in Europe, Brazil, India and China, just to name a few.

The climate crisis has never been more evident and the need for action from every sector of society is increasingly urgent. As a society, we really aren’t having enough success in the face of this epic environmental challenge. Meanwhile, society’s needs for transportation continues to increase, but the earth and humanity urgently need transportation will be much, much cleaner. That means each vehicle must be cleaner and we need to produce, sell and drive those cleaner vehicles.

We must dramatically shift the mix of what we drive to clean transportation technologies. Scale is critical. And to be crystal clear, the so-called scale we’re talking about here, is 100 million new cars and trucks that are produced and sold and put into use each year globally. And it’s also the 1.4 billion vehicles that are already on our roads today.

And so to achieve scale on a global basis, we need clean transportation to also be affordable. Governments can’t incentivize us to scale. California and the United States have been trying for decades, Europe is trying now. The U.S.

Federal EV incentives of $7,500 per vehicle for the first 200,000 units sold by each manufacturer were a substantial incentive. Consider that just three major OEMs making and selling a combined 600,000 federally subsidized battery electric vehicles cost U.S. taxpayers $4.5 billion. And yet, sales are so far from significant in global automotive terms.

Of those 1.4 billion vehicles on our roads today, battery electric vehicles are not even 1%. In the Netherlands, we have another recent example, Tesla’s market share in the Netherlands was nearly 7% in 2019. So far this year, Tesla’s Dutch market share is less than 1%. A precipitous fall, incentive sell away and so did sales.

Affordability doesn’t just matter. Affordability is the key. It’s the key ingredient in the other kind of sustainability that is economic sustainability. Slightly obscured by headlines and article after article about the future EVs and fuel cells is the growing success of Westport Fuel Systems right now.

Our business is growing because our products are available now, they’re affordable now, and they’re effective at reducing CO2 emissions now. And with the increasing availability of renewable fuels, including the potential of green hydrogen, our path forward is clear. We’re making a difference today and our future contributions will be critical to delivering the global response to our environmental challenges. Our HPDI business continues to see strong growth in Europe.

Today, Europe is our main market. And with there, we see the combined impact of growing infrastructure, fuel prices that support increased use of clean fuels and are available now products. In Europe today, low carbon gastrous fuels are less expensive than high carbon gasoline and diesel, and these deals are readily available from a large and growing infrastructure. In Europe today, there are more than 40,000 LPG stations, more than 4,000 CNG stations, and there’s more than 400 LNG stations and the station counts are continuing to increase.

You can find great data at NGVA Europe’s website as well as from other trustworthy resources. Other markets are on a similar path. China is leading the way. India and Africa are following Europe’s and China’s lead and North America holds great potential.

Westport Fuel systems is well positioned. Our goals are significant and we’re on track despite COVID. We’re seeing fleets adopting cleaner fuels and seeking out viable solutions that dramatically reduce carbon emissions. We offer those solutions today and the market is increasingly recognizing our solutions deliver.

They’re clean, they perform and they’re affordable. So while we’re pleased with the recovery in our forward-looking growth trajectory, all of us are still looking to live with COVID and the COVID-induced supply chain disruptions that continue to ripple through our industry and marketplace. Semiconductor supply shortages remain a headwind for the automotive industry, including our business. While we anticipate that the microchip supply chain disruptions will persist into 2022, we do expect an improving trend in the second half of this year.

I’d like to draw your attention to a few highlights in the second quarter and provide a few market insights, then Richard will take you through a more detailed review of our Q2 financial performance. We had record revenues in Q2, up 135% compared to the same period in 2020, and the recovery trend sequentially over several quarters is encouraging, up 10% this quarter versus the first quarter of 2021 and up 56% in the first half of this year versus last year. Revenues was $84.7 million in the first quarter compared to $36 million in Q2 of last year. Net income was more than $17 million, driven by sales growth combined with a tax recovery just shy of $9 million and a gain on acquisition of Stako of nearly $6 million.

Stako, by the way, has been immediately accretive to our Westport Fuel Systems bottom line. We’re thrilled to welcome our key numbers in Poland to Westport Fuel Systems. In addition to strong revenues in our heavy-duty OEM segment, sales in our independent aftermarket and light-duty OEM businesses recovered in Q2 from the impact of COVID-19 as compared to the same period last year when societies and our customers first experienced COVID-related lockdown. We ended the quarter with $106 million in cash and cash equivalents, including the gross proceeds of $115 million from our publicly marketed equity offering completed in June.

We’ve positioned the company for growth and we’re investing in the development of our next-generation products. Overall, our business is growing from a solid foundation and our longer term outlook is very positive. We have a fabulous and committed team and excellent product portfolio, growing sales to global customers across the full range of transportation applications through both aftermarket and OEM channels. It’s the right recipe to achieve our mid-decade goal of $1 billion to profitable sales.

Our joint venture with Cummins is nearing the 20-year mark. Together, we’ve enjoyed a very successful partnership, and together, we have demonstrated that natural gas engines deliver in demanding trucking applications. Our JV is scheduled to end this year and that leaves us with several potential pathways forward. Discussions are ongoing, but there’s no definitive conclusion to announce today.

If the joint venture ends and we go our separate ways, both partners will maintain full and equal access to all of the JV’s intellectual property. Meanwhile, you’ll note that our current HPDI customers are global OEMs that can more easily launch existing products into a new geography in a company that don’t yet have HPDI products fully developed. The opportunity in North America is significant and HPDI offers more performance, more efficiency and the ability to be use today’s renewable natural gas resources and also future green hydrogen. HPDI’s real-world benefits, both environmental and economics, are being demonstrated every day on European roads by thousands of commercial vehicles and generating raved from drivers to fleet operators.

In the U.S. last week, the highly anticipated infrastructure bill was released, largely disappointing EV advocates. The original funding target of $15 billion was cut in half. The encouraging news is that low carbon and zero-emission spending got a massive boost of $7.5 billion with allocations specifically for hydrogen, propane and natural gas stations.

Alternative and gaseous fuel infrastructure continues to be built out in the U.S. and around the world, with more customers accessing natural gas or renewable natural gas. Suites like Amazon and UPS aren’t waiting for technology breakthroughs, they’re acting now to reduce carbon and our clean transportation solutions are saving the money. This is just the beginning for North America.

We believe the performance and the environmental and economic sustainability benefits of our products will help the market further develop and flourish. The market in China is massive and promising for Westport Fuel Systems. China is the global leader for natural gas trucking. It’s the largest LNG refilling infrastructure in the world and the most natural gas field trucks on the road today.

As one of the largest suppliers of natural gas engines in the world, our Weichai-Westport joint venture currently supplies leading commercial vehicle OEMs in China. Last fall, our joint venture with Weichai Power secured certifications for the WP12 natural gas engine equipped with HPDI 2.0. And we’ve recently seen notification that vehicle certification has also been secured. In March of this year, we announced a co-investment agreement to expand the HPDI injector manufacturing footprint into China.

Also in March, we announced amended agreement terms for the supply of at least 25,000 HPDI systems in China through 2024. This represents a significant increase in the minimum volume compared to our 2018 agreement. Last month, the Chinese government announced they will increase the use of natural gas in their overall energy mix from 8.7% last year to 12% by 2030, a 38% increase. This is a strong endorsement for the continued usage, a reliant on natural gas moving forward in the world’s most developed natural gas fuel trucking market.

The foundations are in place. Multiple OEMs are working to integrate HPDI equipped engines into their trucks and bring those trucks to the market. We’re confident that HPDI equipped trucks will enable substantial market growth in China, increasing the share of natural gas in the Chinese trucking market beyond today’s already significant 10% market share. Westport Fuel Systems looks forward to being part of that growth.

Growth of HPDI today leads directly to the future of clean transportation, green hydrogen. Today, hydrogen component sales represent a small but critically important and growing part of our business. Using hydrogen in an internal combustion engine is not a new idea. Hydrogen in a spark-ignited IC engine has been consistently disappointing with low power, low efficiency and real-world performance challenges.

In contrast, high-pressure direct injection of hydrogen, enabled by our patented proprietary HPDI systems is a demonstrated solution. We demonstrated with our HPDI fuel system just this year. Hydrogen HPDI is a game changer. Let me quickly review our accomplishments with hydrogen HPDI already this year.

In January, we announced our project with Scania to develop their engine with hydrogen HPDI. In February, we published with AVL a paper detailing how IC engine using hydrogen with HPDI offers a more affordable path than fuel cells for long-haul trucking applications. In March, we announced the successful demonstration of hydrogen with HPDI, which you can see today and hear today on our YouTube channel. In April, we presented in the industry our results showing hydrogen HPDI offers the highest para density, improved efficiency and is the most robust approach for using hydrogen in internal combustion engines for hedge duty applications.

And just last month in July, we announced the collaboration with TUPY and AVL to develop a highly efficient hydrogen internal combustion engines for heavy goods transportation. The collaboration aims at combining advanced materials and casting technologies with our patented HPDI fuel system. Hydrogen IC engine with HPDI offer not only high performance, high-efficiency and lower total cost of operations, but they also offer other critical advantages for OEMs and suppliers. Our solution enables the reuse of existing factory capacity for engines, drive lines and vehicles.

We’ll use existing engineering know-how and draw on existing supply chain and we’ll avoid creating new sustainability issues with respect to the supply and recycling of precious and rare earth metals. Therefore, we’re confident that HPDI has a long runway from natural gas today, through biogas today and onto green hydrogen tomorrow. We believe hydrogen IC engines provide a compelling future for long-haul transportation and others are starting to share our conviction. I’ll give you two recent examples.

In a recently published paper, the World’s Hydrogen Council has shown that from the total cost of operations perspective, hydrogen can become the most competitive low carbon solution in more than 20 applications by 2030, including long-haul trucking. The McKinsey paper published in June confirms that hydrogen combustion will fulfill an important role at harnessing established technologies and supply chain. As a leading expert in managing gas fuel and the inventor of HPDI, Westport Fuel systems is uniquely capable to lead the way with green hydrogen and transportation applications. Westport Fuel Systems have been at the forefront of the shift to cleaner, low carbon and cost competitive alternative fuels for transportation.

We continue to remain devoted to the decarbonization of transportation sector and the critical need to deploy scale, carbon mutual solutions. Now, over to Richard for more detail on our Q2 results.

Richard OraziettiChief Financial Officer

Thank you, David. As David described earlier, we had another good sequential quarter of financial results with record revenues of approximately $85 million, which were 135% higher year over year, driven mainly by the ramp-up of HPDI product sales and the continued recovery of sales volumes in our light-duty OEM and independent aftermarket businesses. The Stako acquisition also contributed $2.3 million in revenue since the close of the acquisition on May 30, 2021. The year-over-year comparisons to the second quarter of 2020 are somewhat overstated due to the severity of the pandemic impact on our operations and those of our customers that suffered through plant shutdowns and other social distancing measures last year.

Nevertheless, the results do reflect the positive recovery and demand for our products, especially a promising outlook for our HPDI technology. Gross margin increased year over year to $15.7 million and a gross margin percentage of 19%, mainly due to higher sales volumes despite headwinds from the ongoing semiconductor shortages and supply chain issues. Gross margin percentage improved due to the recovery in higher-margin aftermarket sales volumes and also higher year-over-year sales volumes to our initial HPDI launch partner, including some higher-margin development work. Another positive result for the quarter was the continued performance of the CWI joint venture.

Our equity income from CWI was $8 million, an increase of $4 million year over year, primarily due to the recovery in sales volumes from the impact of COVID-19 and also a $1 million tax recovery. Net income for the quarter was $17.2 million compared to net income of $3 million for the same quarter last year. The $14.2 million increase in earnings reflect the positive traction in our sales volumes across the businesses in the current period and the increase in income from the CWI joint venture. Net income also benefited from some extraordinary items this quarter.

We recognized the bargain purchase gain of $5.9 million on the acquisition of Stako. We were able to acquire the business for less than its fair value due to the seller’s interest in divesting their non-core LPG business. On another positive development, we recognized an $8.9 million tax recovery related to an Italian government COVID-19 tax relief program that allowed us to step up the tax basis of some of our Italian assets to increase tax depreciation and thus lower taxes. This quarter, our adjusted EBITDA was $6.2 million, which was comparable to the same period in 2020.

However, as a reminder, adjusted EBITDA in the prior-year second quarter included a $7.7 million insurance recovery related to a $10 million charge for a field service campaign for the replacement of a pressure release device recorded in the first quarter of 2020. Excluding the insurance recovery, adjusted EBITDA increased by $7.7 million, mainly due to the better performance described before. Now, turning to the operational performance of our business segments. Our OEM revenue for the current quarter was $53.1 million compared to $19.1 million for the prior-year quarter.

The significant improvements in revenues were driven by higher year-over-year HPDI product sales to our initial OEM launch partner. Despite challenges of the global semiconductor shortage, production did ameliorate in the second quarter compared to the first quarter. Further, sales volumes of our light-duty OEM, our delayed OEM and electronics businesses are also recovering to pre-COVID-19 levels. The impact of COVID-19 was significant in the prior-year period, which caused plant shutdowns combined with lower light-duty OEM sales to German and Russian OEMs.

We expect to see continued growth in our heavy-duty business and improvements in the light-duty OEM business in the second half of the year. Clearly, the higher sales volumes drove an improvement in gross margin year over year in absolute dollars. Excluding the onetime $7.7 million insurance recovery, gross margin increased by $5.7 million year over year. This quarter we generated a small operating loss of $3.4 million as we continue to invest in the development of our HPDI technology, and our sales volumes are still relatively modest and growing.

As sales volumes grow, the profitability of HPDI will improve through economies of scale on production through our supplier network. Turning to our independent aftermarket. Revenue for the current quarter increased 87% to approximately $32 million compared to the prior-year quarter, primarily due to the general economic recovery from COVID-19 and the related shutdowns in April and May of 2020. Gross margin increased by $5.5 million this quarter to $8.5 million for a gross margin percentage of 27%.

This improvement in gross margin was driven by higher year-over-year sales volumes. Although we were able to generate better sales volumes, the increasing sales mix to lower margin emerging markets which provide a significant opportunity for growth to Westport Fuel Systems and the challenging recovery in Western Europe has challenged on margins. We expect continued improvement in our aftermarket revenues in the second half of 2021, but temper expectation due to the ongoing global shortage of semiconductors, which could impact the independent aftermarket business. Turning now to our liquidity.

Over the past year, we have made significant strides in improving the strength of our balance sheet and liquidity to fund our business plans. Our cash position increased by approximately $96 million since the beginning of the year to $161 million. The increase during the past quarter was primarily the result of the marketed equity offering completed in June, partially offset by a $7.5 million payment of the royalty payable to the Cartesian Group and other debt service. The marketed equity offering in June successfully raised $115 million and approximately $108 million net of transaction costs.

The offering generated a lot of interest and was oversubscribed by numerous institutional investors in North America and Europe and retail investors. The board, the executive management and our largest shareholder all participated in the offering. The funds raised from the offering were a major step to support our growth of Westport Fuel Systems. They invest in capex to expand production capacity in research and development for HPDI technology, acquire bolt-on businesses like Stako with complementary capabilities or technologies to existing businesses and also to further strengthen our balance sheet.

We also continue to manage our debt profile to align the cash flows from our businesses to our investment plans. During the quarter, we refinanced a EUR7.5 million loan with UniCredit in the second quarter under the Decreto Liquidita program maturing in 2027 that we announced to you earlier this year. We’re also negotiating with our partner, Export Development Canada, to refinance our term loan and COVID-19 bridge loan into a long-term credit facility to support funding of our HPDI technology, commercialization and research and development. We received waivers from EDC to defer principal payments on the term loan in COVID-19 bridge loan due in June and July of this year, respectively, to September of 2021 in anticipation of renegotiating the new agreement.

We are very appreciative of the support and relationship with EDC and this refinancing would be another significant step to bolstering our liquidity to fund our growth. With that, I would like to turn it back to you, David

David JohnsonChief Executive Officer

Thanks, Richard. Looking forward, not only are we optimistic, but we’re committed to deliver. We expect continued post-COVID recoveries in markets around the world and continuously increasing demand for transportation. We also see continued regulatory and societal pressure for clean transportation and the persistence of the economic fundamentals that mean only affordable solutions can scale in a way that is meaningful in both automotive and environmental terms.

For Westport Fuel Systems, we’re well positioned and expect growth in all our businesses, but especially growth of HPDI in existing markets, launch of HPDI in new markets and the development of HPDI for hydrogen with existing and new partners. I’m proud of our team and of all of their efforts remain focused on our objectives in the challenging conditions we faced during the last year and a half. We’re well positioned to continue meeting the market in gaseous fuels and believe we have the best team, technology and partners to secure the sizable opportunities ahead. With that, I’d like to turn it back to the operator for your questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Eric Stine of Craig-Hallum. Please go ahead.

Eric StineCraig-Hallum Capital Group — Analyst

Hi, David. Hi, Richard. 

David JohnsonChief Executive Officer

Good morning.

Richard OraziettiChief Financial Officer

Good morning.

Eric StineCraig-Hallum Capital Group — Analyst

Good morning. So maybe just starting on HPDI. And I just want to clarify, so did you say that second-quarter volumes did improve sequentially. And then also, would just love your thoughts on some expectations, obviously, very bullish, but some expectations for the second half of ’21 maybe versus what the run rate you had in 2020.

David JohnsonChief Executive Officer

Yeah thanks for the question, Eric. Well, we’re — as you mentioned, we had the sequential growth already this year, quarter over quarter. Obviously, I say, year-over-year growth in Q1 year-over-year growth in Q2, which, of course, is like the COVID time, but also the continued growth. So fundamentally, this is a product launch that started a few years ago and continues.

The goals for the industry and the world really drive our business. So in Europe, for example, in 2025, the remains is 15% reduction in CO2. And as that goal comes closer and closer, we expect the volumes to continue to ramp in response to trying to meet that goal by our need customer, but also by other customers. So I think we’re on a very good path, and we do expect that continued growth through this year and into the coming years.

Eric StineCraig-Hallum Capital Group — Analyst

Got you. And then maybe just transitioning to China, you’ve been waiting on vehicle certification for quite some time. I mean, anything you can discuss in terms of when you actually might start to see volumes given that when you do, I would think that the ramp maybe is gradual for a couple of quarters, but then can be pretty significant.

David JohnsonChief Executive Officer

Yeah. I think you characterized it correctly. We expect to see a launch. We may expect to see volumes grow.

And the market in China is a huge market, as I’ve pointed out regularly. They’re already in China having a 10% market share of natural gas vehicles and that’s a spark-ignited engine. So it’s like a 10x kind of performance with gaseous fuel vehicles in China versus what we have in North America. So — and the market is three or four times larger than North America.

And so we’re really well positioned. Weichai Power is a great partner of ours. Our joint venture is doing excellent in the market in spark-ignited product. And when we’re able to add and bring HPDI to that marketplace, we expect a really strong response because it offers that improved performance, improved efficiency and really nothing to be taken away from the fleet driver and the truck driver and that really reflects back on what we see in the market today in Europe, where basically, HPDI is winning versus spark-ignited product because of its superior performance.

And so we expect a really important development for ourselves and for our partners in the Chinese market as HPDI launches.

Eric StineCraig-Hallum Capital Group — Analyst

Got it. Maybe last one for me, just on hydrogen. Anything you can discuss about the pipeline now that you’ve got Scania in-house at least for a development agreement. You’ve had a number of data points in progress here.

Anything you can share on the pipeline.

David JohnsonChief Executive Officer

Yeah. From our perspective, we’ve shared what we can in terms of actual mains and results and outlook. But fundamentally, I think the important big picture is that we’ve already demonstrated very clearly and brought to date with the marketplace showing that hydrogen with HPDI is super effective. It’s a great solution.

It’s a great way to use hydrogen. It’s a great way to use HPDI. So the combination is really fantastic. And we expect that really to accelerate the progress of bringing HPDI in the marketplace for natural gas, for biogas and for hydrogen as a function of time as those fuels become increased and available.

So yeah, we think it’s a really important part of our portfolio and our technical capability to respond to the future green hydrogen fuel capabilities.

Eric StineCraig-Hallum Capital Group — Analyst

OK, thanks a lot.

David JohnsonChief Executive Officer

Thanks, Eric.

Operator

Our next question comes from Rob Brown of Lake Street Capital Markets. Please go ahead.

Rob BrownLake Street Capital Markets — Analyst

Good morning.

David JohnsonChief Executive Officer

Good morning, Rob.

Richard OraziettiChief Financial Officer

Good morning, Rob.

Rob BrownLake Street Capital Markets — Analyst

Just sort of following up on the European HPDI growth. If you — you expect — I think you said expect improvement in the back half. Are you seeing pent-up demand maybe from supply chain issues that are going to alleviate or are you — where are you seeing the demand growth in the back half of the year? And how do you first half?

David JohnsonChief Executive Officer

Yeah. So general trend, which has played out since we launched. It’s been a nice growth trend with a volume growing quarter after quarter. One thing that’s very frustrating for all of our shareholders and the investor community is not being able to see that in detail.

We look forward to breaking that out in some detail in the future when we have more customer volume to aggregate in the show. But fundamentally, there have been some constraints in the marketplace in the first half of the year that despite those we’ve still grown. And those constraints are related to all the supply chain shortages, which includes microprocess, as we mentioned, as well as other materials and just a pent-up demand and a residual COVID effected the marketplace globally and certainly still in Europe. So all those factors, we think, have been a headwind for ourselves and our customers.

And then our results are up and we expect that as those headwinds ease, whether it’s COVID or supply that the market will continue to grow. And that’s just on the foundation of the fact that it’s a better product and a response to both the customer demand and regulatory requirements. And as I mentioned in the comments earlier, the key ingredient for all of the things that we bring to the marketplace to have cleaner transportation is their affordability. And you can read a customer testimonial after customer testimonial in Europe saying that the trucks performed really well and the trucks save needs money.

And that combination is the perfect set of ingredients for success.

Rob BrownLake Street Capital Markets — Analyst

And then on the North American market, you talked sort of alluded to some activity there. How do you see that developing? What’s your approach to enter the North American market with HPDI?

David JohnsonChief Executive Officer

I think it’s something that’s truly important in this equation is the fact that the world of commercial trucking and heavy-duty engines for commercial trucking is supplied by just a handful of companies around the world that make and sell the best majority of the product and all these companies basically are global. So our current partners are global OEMs. They have brought and are bringing HPDI to the marketplace in their home market. And I think having done that then that offers the opportunity to expand to markets around the world and that includes North America.

Clearly, the North American market has historically been a little bit slower to develop with natural gas and market share around the world in places like China and Europe, for example. And that’s primarily due to the fuel price dynamics in North America, where that fuel price differential isn’t as significant and it’s as persistent historically as it has been in other markets. So I think that’s an important part of the equation. So we’re really excited about the opportunity in North America based on the need from an environmental perspective and the effectiveness of our product to respond to that factor.

So we see companies that have made the analysis of natural gas in trucking in North America, leaning forward and buying more and more and shifting their fleet. But we’re expecting that will increase in the future as ESG requirements and societal demands and regulations and fuel price dynamics modify over time and get more and more European and Chinese, like in the North American market.

Rob BrownLake Street Capital Markets — Analyst

Great. Thank you for the color. I’ll turn it over.

David JohnsonChief Executive Officer

Thanks, Rob.

Operator

Our next question comes from Colin Rusch of Oppenheimer. Please go ahead.

Colin RuschOppenheimer & Co. Inc. — Analyst

Thanks so much guys. Could you give us an update on where you’re at now with the HPDI for hydrogen testing and risking? Have you begun those tests full in? Are you still doing preparation work? What’s the latest on that front?

David JohnsonChief Executive Officer

So our projects are proceeding. So we have engines in the test cell doing work. And as we develop results that we’re able to share and as our customers allow us to share, we’ve been sharing that with the marketplace. So we did a presentation of our own results in Vienna in April that we referred to earlier.

And we have an upcoming presentation in Venice, Austria in early September. And so we’ll continue to bring that news to the marketplace as it becomes available. For us, development of hydrogen HPDI is an ongoing effort on our own R&D dollar as well as with our customers’ projects as announced Scania and TUPY and AVL. These are really, I would say, meaningful developments, important developments.

And for us, very exciting, because it’s moving on to this next fuel of the future of greenfield for transportation. And our results already are very exciting. So yes, as we have more to share, we’ll certainly be sharing. You can count on us to do so.

Colin RuschOppenheimer & Co. Inc. — Analyst

Thanks so much. And then with the potential for adding in new HPDI customers on the natural gas side because of the runway that you provide into hydrogen. Can you talk about the benchmarks that those customers are looking for before they would move forward with you guys on the natural gas side from the hydrogen testing?

David JohnsonChief Executive Officer

I think the real question, Colin, is when do our customers make announcements, right? The business of developing engines and bringing into production in — for any technology, including ours, is a multiyear activity, where we engage with customers as we did with our lead customer in Europe and our customer in China many years ago, and we need to developing the test cell and we need to develop new vehicles. And so this is a multiyear activity. And in many cases, as of a vacation with our lead European customer, the announcements don’t come in direct alignment with what’s actually happening. So I apologize for that.

It’s just the way it works in our industry. And we’re looking forward to being — hearing and seeing the announcement from our customers as they grow ready HPDI.

Colin RuschOppenheimer & Co. Inc. — Analyst

That’s helpful. Thanks so much.

David JohnsonChief Executive Officer

Our pleasure.

Operator

Our next question comes from Amit Dayal of H.C. Wainwright. Please go ahead.

Amit DayalH.C. Wainwright & Co. — Analyst

Thank you. Good morning, everyone.

David JohnsonChief Executive Officer

Good morning.

Amit DayalH.C. Wainwright & Co. — Analyst

I have — Hi, David. Has the COVID sort of impacting the recovery process, made any difference in the historical seasonality. We typically see the fourth few quarters the strongest for you guys. Because of what has transpired over the last 12 months, should we anticipate any change to have some that revenue gains plays out at least.

David JohnsonChief Executive Officer

Yeah. I think I understand your question about how does COVID and seasonality fit together. To me, it’s a simple, super position. So can we just add the two effects together.

I don’t think there’s any fundamental change in the seasonality of our business. And a clear example that we control is in the month of August, coming up the next couple of weeks, we have our typical Italian holiday period. And so we’ll close the factories for a couple of weeks. And of course, we’ll continue to do business, but there is this drop in supply in the month of August.

It always happens for us. And the second quarter tends to be a strong quarter. Fourth quarter tends to taper off a little bit. But some of these trends and our seasonality are changing as the mix of our business changes from heavily reliant on aftermarket to more of a mix of OEM and aftermarket.

We’ve talked and put up the results, so you can see it as the mix between OEM and aftermarket. We break that out in our financial analysis. You can see what that mix looks like. And as we increasingly become an OEM business and a Tier 1 supplier to those OEMs, that seasonality will change more to an automotive as opposed to consumer products.

Meanwhile with respect to COVID, that has been an affect in the marketplace. I would say not so much on the heavy truck side, although there’s been other supply side challenges that have been induced by COVID I believe and other factors, of course. So to me, you kind of have to do a little math and kind of make the forecast on what you think the COVID effects are and what’s the seasonality is and how it changes between aftermarket and OEM to try and get an idea of how all those effects are coming out in our results. Fundamentally, the backdrop of all that are going to be the foundation of all that, is the fundamentals of our business, clean affordable technology and need for those new marketplace.

So we do see this growing business and that’s why we’re excited to have another quarter — another record quarter, and we look to look to more in the future.

Amit DayalH.C. Wainwright & Co. — Analyst

And just one more from me. With this Cummins contract coming to an end potentially in December, for renewal, I guess, is there a potential strategy to fill gap from those contributions if the relationship does not continue?

David JohnsonChief Executive Officer

Yeah. So we have quite a few additional alternatives. And of course, our business is global. It’s not just a North American business.

Our business is varied in terms of market segments we address. And so frankly, we see growth across all of our different geographies, product segments. Of course, HPDI is an important part of that. We think HPDI has an important role to play in North America as the market continues to develop.

So yes, there’s lots of different opportunities to back fill in the case that our joint venture wind up as is currently contracted to do. But we’re also continuing to have the discussions with our partner around other alternatives and what might happen in the future. So yeah, stay tuned. So as we have some news, we’ll share it with you.

Amit DayalH.C. Wainwright & Co. — Analyst

Got it. And maybe — sneaking one last one, sorry. How many customers for HPDI do we have accredited at the end of the year? 

David JohnsonChief Executive Officer

So I think the way I count is that we have the customer that’s in production in Europe. We have the customer that has a production in China. And then we have the two customers that we’ve announced that are developing hydrogen HPDI with that. And so one is, I would say, not a typical OEM customer, our partnership with TUPY and AVL.

But certainly, we think and they think leads to customers that bring hydrogen HPDI in the marketplace. So those are kind of four announce. I don’t have any more announcements on that, but you can imagine that we have other projects that aren’t announced. So that’s just the way the business works.

Amit DayalH.C. Wainwright & Co. — Analyst

OK, thank you.

David JohnsonChief Executive Officer

Thank you.

Operator

Our next question comes from Jeff Osborne of Cowen and Company. Please go ahead.

Jeff OsborneCowen and Company — Analyst

Yeah. A lot of my questions have been answered. A couple of clarifications. Just on China, I thought the — in your prepared remarks, you said they had certification.

But then to Eric’s question, you didn’t. I thought they received batch 344 certification in mid-June.

David JohnsonChief Executive Officer

So we found in the public domain some announcements of vehicle certification. So we know those steps have been completed and we can reference them in a public way. And so that’s what has happened and as we mentioned in my earlier remarks.

Jeff OsborneCowen and Company — Analyst

Got it. So once you have that certification, you then need to get designed into a truck OEM. Do you have any sense in working with them that it’s actually being marketed or sold?

David JohnsonChief Executive Officer

Yeah. So these are the announcements, Jeff, that we have to lead to our customers. But basically, the certification that’s been achieved is both the engine cert, if we did, our joint venture did last year and then our customers are doing the vehicle search and we’ve seen those published in China. So we know those have been achieved.

So with that, basically, then the next steps are basically on to the marketplace. But again, these are the announcements that will come from our JVs customers benfit truck OEMs, not from us.

Jeff OsborneCowen and Company — Analyst

Got it. And then how is the expansion in China with your manufacturing partner there? Is that up and running? Do you have the capacity to meet the agreement that you’ve extended through 2024 or can you remind us on how…

David JohnsonChief Executive Officer

Yeah. Thanks for asking this. It’s really important that we have made these investments and are putting the equipment into place. That’s a this year activity and that will support the ramp that we forecast in the Chinese market.

We have a long-standing partnership on our fuel injector with BorgWarner and we’re excited about this development and making the investment necessary to support the marketplace. So it’s happening now, and the capacity will be available to support the launch trip that we expect. That’s our business. We put the best in place, so we get the port of the ramps that we even forecast and expect and understand from our customers.

Jeff OsborneCowen and Company — Analyst

Got it. Then I had a question on the hydrogen side. You mentioned the performance of HPDI versus spark-ignited and you saw similar trends with nat gas, with torque and whatnot. But my understanding is I thought hydrogen with engines, as you indicated in your prepared remarks, has been tried for years.

One of the challenges I thought was embrittlement of the hydrogen molecule into the metal itself where it sort of diffuses into the metal. Is there anything unique about HPDI that would avoid that problem or can you talk about what embrittlement trends have been in terms of performance and measuring NOx and SOx with the various different tests that you’ve done with Scania?

David JohnsonChief Executive Officer

Yeah. So glad to talk about that. So we are in this phase and you can tell from our announcements with both Scania, AVL and TUPY that we need to go do some work and actually develop the product all the way to production. The initial demonstration that we’ve done show the clear promise and potential of the fundamentals of the combustion system.

But as you know well and everybody on the call should really understand the world of commercial trucking, the first priority of every tractor is to make sure that their truck always runs and has its long durability for thousands — hundreds of thousands of kilometers and miles. So that long-term durability is something that we need to develop and demonstrate. And quote unquote the hydrogen embrittlement challenge, which is a real material science type challenge, is still to be, let’s say, fully addressed. I don’t anticipate any problem to do that, but yes, we have to go do it.

And so that’s some of the work that is ahead of us still. I can’t say it’s fully solved, but at the same time, I can also say that so far our tests have no issues identified. But it’s a real plan and we need to work on it and that’s engineering work that would be done.

Jeff OsborneCowen and Company — Analyst

And just a follow-up on that hopefully a non-technical question, but the intent is to allow the installed base to use this. So there’s no augmentation of the metals within the engine block versus you could avoid embrittlement by using different materials, but is that correct? The idea would be to upgrade existing nat gas engines to something greener.

David JohnsonChief Executive Officer

Yeah. I really don’t expect this to be a retrofit activity. In other words, we’re not going to pull a truck into a shop and change injectors and fuel systems into hydrogen just like we don’t take a diesel truck today and pull it into a shop and turn it to an HPDI. The business of making engines for long-haul trucking is an OEM business, and I expect it to remain an OEM business.

And so we’ll develop the hardware that has the fuel injection system as well as the engine hardware and make whatever necessary changes are required in order to produce a product that customers can count on and that delivers the benefits that we’ve already demonstrated with hydrogen and HPDI.

Jeff OsborneCowen and Company — Analyst

Perfect. Thanks for the clarification. I appreciate it.

David JohnsonChief Executive Officer

My pleasure, Jeff. Good to hear you.

Operator

[Operator instructions]. Our next question comes from Mac Whale of Cormark Securities. Please go ahead.

Mac WhaleCormark Securities — Analyst

Hey. Good morning, gentlemen. Just a question on long-term goals. David, you mentioned the profitable sales target mid-decade, what — in broad strokes, what would the segmentation and gross margin look like under that scenario? What is it just that you’re aiming to achieve or think you can achieve on that profitable sales target?

David JohnsonChief Executive Officer

Yeah. Thanks for asking. So this goal that we’ve set for mid-decade to have $1 billion in revenue is not just a revenue goal, but also includes a 20% gross margin on our business in total. And then in terms of how does that business develop, we see growth across all our segments.

Richard mentioned earlier, some of the developments we’re seeing of our aftermarket business in developing markets around the world in places like Algeria and Egypt and India. And so as we look at our full suite of business, really, we will hit on all cylinders, so to speak, to build that $1 billion book of business with the profitability that we can be proud of. And so that’s the plan and the outlook for our growth of our company. Of course, a key ingredient in that is the growth of HPDI from one product in one market with one customer to a product that’s selling broadly around the world, China being next, North America after that and then more and more OEMs at the hydrogen future starts to hit the road with our technology.

Mac WhaleCormark Securities — Analyst

And then following up on that or maybe linked to that. On the hydrogen side, so I suppose the hydrogen portion of that is sizable because you get investment on infrastructure and development along the cost declines for hydrogen, let’s just suppose all that happens. Do — what level of spend do you foresee sort of on an annual basis? Is this like a — is it a $10 million a year sort of tax, is it $25 million? Is it like — can you just give an idea of what the next sort of four or five years will require in terms of spend on getting that commercial?

David JohnsonChief Executive Officer

Yes. So I think the key ingredient here, actually, in terms of spending going forward, I would say, is not so much on the R&D side. Of course, there is some spending. We’ll continue to invest in new products and that’s part of our road map and business plan.

But I would tell you that the bigger spend is getting the capacity in place to grow and support our customers as more and more HPDI customers adopt the technology and then follow their own launch and growth curves. And so that would be the bigger part of the spend. And yes, I don’t have figures to share with you, but as I mentioned, we see a relatively modest curve of spending going forward, not some huge capital need that anybody needs to bake into a model.

Mac WhaleCormark Securities — Analyst

OK. And then just lastly, on the future of the JV. Is there — and perhaps if it’s available online, just point me to that, but is there details on how the roll-off would occur like in terms of — like is there a stipulation that one partner buys out the other or that you have to share in the roll-up cost or anything of that nature that’s available?

David JohnsonChief Executive Officer

So a decade ago, when we signed the current JV agreement, we did post that as one of our material agreements and filed that with some reactions. But basically, the fundamental structure of that is all laid out in the agreement. The question that everyone is asking and we don’t have an answer for it today, but we’ll have to into the future is, will there be any change that that we’ll just follow that formula. So yes, we can point you to that document, so you can come up to speed on what the current agreement says.

Mac WhaleCormark Securities — Analyst

OK, great. Thanks guys.

David JohnsonChief Executive Officer

Thank you.

Operator

Our next question comes from Eduardo de Jambin from the webcast. His question is any sale of HPDI in South Africa or Australia? And what about HPDI in off-road applications, any update?

David JohnsonChief Executive Officer

Eduardo, good to hear you. Thanks for your question. So generally speaking, we have our business with our lead European customer and they are a global OEM, as you well know, and consider markets around the world as potential markets for HPDI. I can’t go into any geographic details.

That’s their business, not ours, but we’re certainly pleased to support them as they investigate the opportunity for HPDI in the market. In terms of off-road markets, we certainly see an opportunity there. This has been something that Westport Fuel Systems from the Westport innovations days has proceeded and investigated. And certainly, there are opportunities.

As a general premise, I see those to be kind of right in this time frame kind of as a follow-on activity to on-road. So in my experience industry, on-road trucks leads with technology and off-road comes as a follow-on. So we certainly see that as an opportunity and we recognize in industries like mining, for example, there is a big push to clean up the, let’s say, industrial side and the internal combustion engine side of their business to move toward greater and lower carbon technologies like ours.

Operator

Our next question from the webcast comes from David Douglas. What is the true state of play with Weichai and Cummins? If not yet, when will we know is date certain, if neither is likely to come to fruition, what is the plan going forward?

David JohnsonChief Executive Officer

Yeah. So I think we’ve covered this quite well, David. And while I appreciate the question. We’re offering in this call the state of play and that is we have a joint venture with Cummins.

It’s scheduled to end at the end of this year and we’re in discussions with our partner on alternatives to that ending. And if there’s some change, we’ll certainly announce it in — when we have that conclusion. The same is true with our partner, Weichai. We’ve been very transparent about what’s happening to the best of our ability.

And when we have some more news, we’ll share that. So you might recall that we signed a new agreement with Weichai earlier this year, committing to the business and an increased volume of now 25,000 systems at a minimum through 2024. And meanwhile, the market in China and our partner are poised to bring HPDI to that market. So we, yes, we’re excited about the future and anxious and eager as you are.

Operator

Our next question from the webcast comes from Charles Orensky. Your European — is your European partner also stressing its future of electric trucks? How long is that away and it seems they’re not interested in hydrogen? Any comments are greatly appreciated.

David JohnsonChief Executive Officer

So I can read what you can read in terms of what our partner is doing in Europe. And then in addition, I have kind of the insights into how we see the HPDI growth curve of that partner in Europe. And I think, broadly speaking, across the industry, including our lead partner in Europe, everybody is kind of placing their bets and not putting all their eggs in one basket, right? So I would tell you from just observing the industry as you can also that people are making bets on fuel cell, people are making bets on battery electric. And I guess the big picture from my perspective is that recognized that these truck manufacturers, all of them make a full breadth of offerings to the marketplace from transit vehicles for intercity that carry relatively light loads and doing a lot of stop and go to long-haul trucking.

And in some cases, they’re also offering off-road equipment. So it’s a full range of applications. And what I would point you to is that over a long period of time, I’m talking the full century of the development of the internal combustion engine and our industries for automotive and off-road and propulsion systems, that there’s always been a diversity of solutions that applies in the marketplace. It’s never been one thing that solves all our needs from a motorcycle to a long-haul truck to an earth moving equipment in a mine in any geography around the world.

And so these diversities of solutions have evolved over time as technology has evolved over time and as the requirements in the marketplace has evolved over time. So just to put a point on it, a real clear example is basically before World War II, all engines for almost everything were spark-ignited gasoline, petrol engines. Post-World War II, we saw the real development and proliferation of the diesel engine and trucking, and now basically, all trucks are diesel engines, quote unquote all like 98% and all cars quote unquote and roughly speaking, almost all of them are gasoline engines. And so you have this split of the market.

And as we go forward, OEMs are investing in a suite of technologies and there’s going to be a mix of those technologies going forward. What I can clearly point to is that the mix of natural gas and trucking has grown very strongly in very specific segments, and it’s continued to grow in Europe and better technologies like ours that are affordable, we’ll win at the end of the day. And so that, to me, is the overall picture that I can put to.

Operator

Our next question is from the webcast from James Warner. Are there penalties if wage does not meet the HDPI purchase goal of 25,000 units by the end of 2024?

David JohnsonChief Executive Officer

Not so much penalties, James, but actually, there the contract we’ve signed is very similar in form of the contract you signed back in 2018, and that is they’re committed to buy a minimum of 25,000. So it’s this kind of they’re committed to making these purchases at a certain price. And the only question is, what is the curve of those purchases that ends up a 25,000 systems purchased by 2024.

Operator

Our next question from the webcast comes from Peter Wong. Will HPDI two in North America require LNG infrastructure first?

David JohnsonChief Executive Officer

Yeah. So very interesting question, Peter. Thanks for asking. Basically, at the engine, the fuel that we’re injecting into the engine with our HPDI system is basically, I would say, mid-pressure.

It’s not liquefied, it’s a gas. And so we can run HPDI with a gaseous fuel system, with the CNG fuel system. We don’t need an LNG fuel system. And so both options are possible for us.

Today, in the marketplace for both Europe and China, we’re bringing to market an LNG system. And the reason we bring in LNG system is that LNG is a much more dense form of natural gas and therefore, you get better range. So it’s really about the application. So if you want to apply HPDI in an application that doesn’t have a longer range, you can use CNG or you can use more tanks of CNG.

And in the North American market, as you know, it’s very possible to put a back of cab, tank system and have plenty of CNG. And so we definitely see that as an option for HPDI in North America and CNG HPDI option.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Christine Marks for any closing remarks.

Christine MarksInvestor Relations

Thank you and thank you everyone for joining us today. If you do have any follow-up questions, please feel free to reach out to us at the Westport Fuel Systems investor relations team. Thank you again for your interest in Westport Fuel systems, and have a wonderful day.

Duration: 60 minutes

Call participants:

Christine MarksInvestor Relations

David JohnsonChief Executive Officer

Richard OraziettiChief Financial Officer

Eric StineCraig-Hallum Capital Group — Analyst

Rob BrownLake Street Capital Markets — Analyst

Colin RuschOppenheimer & Co. Inc. — Analyst

Amit DayalH.C. Wainwright & Co. — Analyst

Jeff OsborneCowen and Company — Analyst

Mac WhaleCormark Securities — Analyst

More WPRT analysis

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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EU issues corporate due diligence guidelines for forced labor | Hogan Lovells https://tyntescastle.com/eu-issues-corporate-due-diligence-guidelines-for-forced-labor-hogan-lovells/ https://tyntescastle.com/eu-issues-corporate-due-diligence-guidelines-for-forced-labor-hogan-lovells/#respond Tue, 10 Aug 2021 20:16:54 +0000 https://tyntescastle.com/eu-issues-corporate-due-diligence-guidelines-for-forced-labor-hogan-lovells/

On July 12, 2021, the European Commission and the European External Action Service released due diligence guidance for EU businesses to address the risk of forced labor in their operations and supply chains. ‘Procurement, which provides practical advice on implementing corporate forced labor due diligence. The publication of the guide responds to a specific commitment included in the Communication on Trade Policy Review published in February 2021.

The Guide (available in full here) reflects the growing trend – both internationally and within individual jurisdictions – towards mandatory human rights due diligence (see in particular our blog post on German Supply Chain Law) and the growing business, public and political expectations of companies in all sectors to assess and mitigate human rights risks in their operations and chains supply.

Although the Guide is non-binding, relatively brief and expressly states that it does not reflect any official political position, it is particularly interesting in light of the Commission’s intention to introduce legislation to create a new mandatory obligation for companies to respect human rights. and environmental due diligence (see our blog post).

Due diligence framework

The Guide is largely based on existing international standards and in particular the fundamental ILO Conventions, the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multi-national companies. It recommends that due diligence be implemented in accordance with the six-step framework established by the OECD Due Diligence Guidance for Responsible Business Conduct:

  • Embed responsible business conduct into policies and management systems.

  • Identify and assess the actual and potential negative impacts associated with the company’s operations, products or services.

  • Stop, prevent and mitigate negative impacts.

  • Monitor implementation and results.

  • Communicate how impacts are handled.

Most of these steps are not covered in detail in the Guide, but recommendations are provided on how policies and management systems should be adapted to the risks of forced labor, with particular emphasis on the need to ” a “zero tolerance policy”, by raising awareness with staff and suppliers, and protecting whistleblowers.

Risk assessment

The Guide lists a number of ‘red flags’ to consider when assessing supply chains based on:

  • National risk factors (such as countries with state-sponsored programs, laws prohibiting peaceful strikes, or prison labor policies).

  • Risk factors related to migration and informality (such as employment of migrant workers, provision of housing for workers and lack of written employment contracts).

  • Risk factors related to the presence of debt risk (such as credit agreements for workers, lack of access to identity and residence documents, and excessive working hours).

Additional guidance is provided on considerations to be taken into account in a thorough risk assessment of suppliers and high risk sectors, including on improving training and site inspections.

Action to combat and remedy forced labor

The Guide sets out a series of considerations that businesses should take into account after identifying the risks or impacts of modern slavery. These revolve around the following themes:

  • Action to deal with the risks of forced labor (mainly helping suppliers and companies to agree on corrective action plans, including “where appropriate financial support”).

  • Address the risks of state sponsored forced labor (focusing primarily on direct and indirect communication to governments).

  • Responsible disengagement from business relationships (relatively detailed advice is given on how and under which companies can opt out).

  • Remediation (companies are advised to ‘seek to put the affected person (s) back to the situation they would have been in had the negative impact not occurred (to the extent possible) and to allow for proportionate remediation the magnitude and magnitude of the negative impact ”but little additional practical advice is provided).

The Guide also discusses how due diligence can be made gender sensitive taking into account the different risks in the supply chain for men and women, and how discrimination against ethnic or religious minorities can also be taken into account. account.

Next steps

The Guide includes some new aspects, including disengagement from trade relations and gender, but it is largely based on existing standards and in particular the OECD Due Diligence Guide. The advice provided on remediation is relatively brief and underdeveloped, but clearly sets high expectations for companies.

Any future EU human rights due diligence legislation, or guidance issued under such legislation, may reflect similar approaches to those adopted in the Operational Guidelines. Legislation to introduce mandatory environmental and human rights due diligence was due to be introduced in the first half of 2021, but was delayed following a negative assessment by the EU’s review panel. Commission regulations.

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Vodafone roaming: what do the charges mean for my phone bill? What do other telephone networks charge? https://tyntescastle.com/vodafone-roaming-what-do-the-charges-mean-for-my-phone-bill-what-do-other-telephone-networks-charge/ https://tyntescastle.com/vodafone-roaming-what-do-the-charges-mean-for-my-phone-bill-what-do-other-telephone-networks-charge/#respond Mon, 09 Aug 2021 15:47:32 +0000 https://tyntescastle.com/vodafone-roaming-what-do-the-charges-mean-for-my-phone-bill-what-do-other-telephone-networks-charge/

Vodafone became the second major UK network to reintroduce roaming charges for UK customers traveling to Europe from next year.

New and upgrading customers will soon have to pay up to £ 2 per day to use their monthly data, calls and SMS allowance, at the latest post-Brexit blow.

Vodafone follows in the footsteps of EE, owned by BT, which was the first to announce the reintroduction of roaming charges in June.

Roaming charges when traveling across Europe ended in June 2017, allowing consumers to continue using their mobile plan in other EU countries at no additional cost, with a fair usage limit .

Vodafone roaming charges: will I be affected?

New Vodafone customers who register from August 11 will be affected by the change.

It doesn’t include existing customers and anyone on the company’s Xtra plans, however if someone upgrades and renews their contract from August 11, they’ll have to pay as well.

Anyone who upgrades and renews their contract from the same date will also have to pay roaming charges. Credit: Press Association

So if your contract ends and you leave it running and unchanged, you won’t fall under the new rules.

The charges do not come into effect until January 6, 2022.

How much are Vodafone roaming charges?

A daily charge of £ 2 will apply to use all of your EE data, minutes and SMS allowance when traveling to affected EU countries.

But there are multi-day passes that can be purchased in advance that cost £ 1 per day – they’re available for eight-day or 15-day packages.

Subscribers to the company’s more expensive Xtra plans will still have roaming included, while the Republic of Ireland will be exempt for all customers.

Vodafone said less than half of its customers were roaming beyond the Republic of Ireland in 2019.

In which countries will I now be billed for roaming on Vodafone?

Credit: PA

Charges will apply to European destinations, although the Republic of Ireland is exempt.

The complete list within Vodafone’s “Europe zone” includes: Aland Islands, Austria, Azores, Balearic Islands, Belgium, Bulgaria, Canary Islands, Croatia, Cyprus except Cyprus North, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France (including Corsica), French Guiana, Germany, Gibraltar, Greece, Guadeloupe, Guernsey, Hungary, Iceland, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Madeira, Malta, Martinique, Mayotte, Monaco, Netherlands, Norway, Poland, Portugal, Réunion, Romania, San Marino, Slovakia, Slovenia, Spain, St Barthélemy, St Martin, Sweden, Switzerland and Vatican City.

Which UK telephone networks charge for roaming?

owned by BT EE has announced plans to reintroduce roaming charges for Europe in June, from £ 2 per day – although EE also offers packages to reduce the overall cost.

O2 and Three have so far avoided going down the same path and are sticking to fair use limits, which is not unusual as it complies with current EU rules.

Three’s fair use cap was lowered from 20GB to 12GB per month in July – and O2 has a 25GB limit.

EE had previously said it would not reintroduce roaming charges. Credit: Pennsylvania

Paolo Pescatore, analyst for PP Foresight, said consumers should expect others to follow suit.

“Phone users will now need to be more aware when traveling on board,” he said.

“Some will have roaming included in more expensive plans and premium devices, while others will be forced to consider switching to wifi and subscribing to local e-sim options.”

How to avoid roaming charges in the EU?

Vodafone customers should consider adding the eight or 15 day passes for longer trips to EU countries, which will reduce the daily cost to £ 1.

Nowadays, many hotels and restaurants offer free wifi, so make good use of it.

You may want to consider switching to another network provider.

Those traveling to Dubrovnik in Croatia will also be affected by the latest roaming charges. Credit: PA

Make sure data roaming is turned off in your smartphone settings when in doubt to avoid unpleasant surprises. Or finally, turn off your phone completely and enjoy your trip without any disruption.

“When it comes to traveling, don’t wait until the last minute to check roaming charges for your destination, and always use the hotel’s wifi and cafe when you’re on vacation whenever possible.” , warned Ernest Doku, mobile expert at Uswitch.com.

What did Vodafone say about the latest roaming charges?

“Rather than having all of our customers affected by including additional roaming costs in all of our tariffs, customers will be able to choose a plan with roaming included, or purchase an additional roaming pass,” a spokesperson said.

They added: “Our ambition is to ensure that customers never experience a ‘bill shock’ when roaming with Vodafone, as all of our plans and packages will have clear usage limits, and customers will also be able to set their own limits via Vodafone Expense Manager, which is free to configure via the My Vodafone app. “

Those that remain on their current rate plan will not be affected until they make changes.


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